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IMF Warns Recession Will Be Longer, Deeper

The International Monetary Fund warns the global recession will hit deeper and last longer than previously thought, while touching almost every country on Earth.

The IMF's semiannual World Economic Outlook, released Wednesday, says the current recession is the worst "by far" since the Great Depression of the 1930s. It forecast the world economy will shrink by 1.3 percent this year.

The global economy's worst performance in 60 years caught IMF experts by surprise; just three months ago, they predicted slight but positive growth this year.

Now the IMF says sluggish growth is not expected until 2010. Chief Economist Olivier Blanchard says that depends on the recovery of a fragile banking system which is still hesitant to lend money to consumers and businesses.

The IMF forecast for the United States, the world's largest economy, is even bleaker. It predicts the U.S. economy will shrink 2.8 percent this year and will not see any growth in 2010.

The IMF expects Japan's economy to shrink 6.2 percent this year, while the euro zone (European Union members that use the euro as their common currency) will contract by 4.2 percent.

Russia's economy also is expected to shrink, while China's economy will grow, but at a slower pace.

By next year, the IMF says, unemployment is expected to hit more than 10 percent in the U.S. and Germany, with jobless figures almost as high in Britain.

The report warns the recession could be prolonged if countries do not continue or increase their current efforts to stimulate consumer demand.

As the World Economic Outlook was released in Washington, more sobering economic data came in from abroad.

Russia said unemployment for the first three months of 2009 jumped by 34 percent, compared to the same period last year, and Taiwan said its unemployment rate hit an all-time high of 5.81 percent.

Britain predicted its economy will shrink by 3.5 percent, forcing the government to borrow a record $254 billion.

And Japan said exports fell almost 46 percent in March.

However, a central-bank official in China, Deputy Governor Yi Gang, said the world's most populous nation is on the road to recovery, having bottomed out at the end of 2008.

The IMF monitors the global economy, warns of impending crises and offers financial and technical advice to its 185 member nations.

Senior officials from IMF states will gather in Washington next week to discuss the global recession and other economic issues.

Some information for this report was provided by AFP, AP and Reuters.