"At this point, we expect global GDP to decline between half a per cent and one per cent in 2009 before recovery gradually gets underway in 2010," a senior IMF official told reporters at its Washington headquarters on a briefing held to release its G-20 Surveillance Note on Thursday.

"The major advanced economies, the United States, the Euro Area and Japan, are all suffering severe recessions. The emerging and developing economies are slowing abruptly and many of these are also likely to see falls in activity in 2009," the official said.

However, he added that the forecast is not complete yet.  This downgrade essentially reflects two assessments.

"First, the data for the fourth quarter of 2008 and for early 2009 show an even sharper contraction in output and trade than we had anticipated earlier as negative interactions between real and financial sectors have intensified," he said.

The IMF now estimate that global GDP contracted by an extraordinary 5 per cent at an annualised rate in the fourth quarter of 2008. Moreover, global output continues to decline at a similar pace in the current quarter based on recent data on industrial production, business and household sentiment and trade.