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Now the trouble starts, says IMF.

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The head of the International Monetary Fund gave a gloomy report yesterday on prospects for the world economy to a dozen leaders debating how to respond to global financial turmoil. IMF managing director Dominique Strauss-Kahn told a high-powered forum hosted by British prime minister Gordon Brown that most of the downside risks to the world economy feared six months ago had now become reality.

"The forecasts we are going to release in a few days are not really improving," Strauss-Kahn said. The IMF is due to release its twice-yearly World Economic Outlook this week, just before the IMF's spring meetings in Washington.

Last week, the IMF said it had cut its 2008 outlook for world economic growth for the second time this year - a move that acknowledged housing and credit problems in the US were exacting a heavy toll on the global economy. The IMF now expects global growth to slow to 3.7 per cent this year, down from its January forecast of 4.1 per cent and lower still from the 4.8 per cent rate it predicted in October last year.

Brown has called together a dozen leaders from centre-left parties, including South African president Thabo Mbeki, Australian prime minister Kevin Rudd, Austrian Chancellor Alfred Gusenbauer and Ghana's president John Kufuor, to discuss globalisation, climate change and reforms to global institutions at a conference outside London.

Strauss-Kahn also said it was "not enough to think" that fiscal stimulus would boost growth next year.

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Publication:7 Days (Dubai, United Arab Emirates)
Date:Apr 6, 2008
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