More spending required to stimulate global economy – IMF

More spending by governments will be needed to stimulate worldwide economic growth, the head of the International Monetary Fund (IMF) has told the BBC.

Dominique Strauss-Kahn said he feared measures announced by the Group of 20 nations last month would not be enough.

The IMF has already cut its forecast for global growth next year, and he said the next projection, due in January, would be even worse.

Mr Strauss-Kahn spoke of “2009 as really being a bad year”.

“I’m specially concerned by the fact that our forecast, already very dark… will be even darker if not enough fiscal stimulus is implemented,” he said in an interview with BBC Radio 4.

He said it would take a spending stimulus equivalent to about 2% of global Gross Domestic Product, or about $1.2 trillion, to make a real difference.

The level of debt in the UK was “disturbing”, he said, and although he would not have previously recommended that the government borrow more, given the severity of the economic downturn it was the lesser of two evils.

“The question of having social unrest has been highlighted by journalists and I can understand that, but it’s only part of the problem,” he said.

“The problem is that all the whole society is going to suffer.”

In November, the IMF lowered its global economic growth forecast to 2.2% from 3%.

Last week, Mr Strauss-Kahn said the IMF could cut its 2009 forecast for China to around 5% amid an “unprecedented” global slowdown.

Source: BBC