IMF chief economist Olivier Blanchard says the financial crisis will significantly slow global growth during the next year. Speaking at the start of the Washington annual meeting of the IMF and World Bank, Blanchard said the crisis is having its severest impact in advanced economies.
"We predict that growth in advanced countries will be close to zero, or even negative, until at least the middle of 2009, with a slow recovery until the rest of the year," he said.
Blanchard, a French economist and professor at the Massachusetts Institute of Technology, says world growth has been sustained by robust growth in China and India. But, he says emerging markets will soon feel the effects of the financial crisis, as well.
"All, or nearly all [emerging economies], will suffer from lower exports to advanced economies, and this will slow down their growth," he said. "Most will suffer from more expensive foreign credit. We are already seeing this happen."

In preparing its forecast, the International Monetary Fund assumed coordinated action by the Americans, Europeans and Japanese to stimulate growth and avoid a global downturn. The Fund says, after safeguarding financial institutions, governments should use fiscal policy to put more money into the hands of consumers.