Economies Are Quickly Sinking Further Into The Quicksand Of Recession, IMF Warns

Washington, D.C. (AHN) - The global economic crisis has widened due to regulatory and supervisory failures in advanced economies, the head of International Monetary Fund said on Thursday.

The world is on "the cusp of a global recession," but if countries take a joint action, the economies would recover, Dominique Strauss-Kahn added.

In an annual meeting between International Monetary Fund and World Bank in Washington D.C. on Thursday said they can provide emergency plans to bailout countries affected by the financial crisis.

On Wednesday, IMF had indicated that the world's financial institutions are expected to incur combined losses of $1.4 trillion due to the widespread crisis caused by the U.S. subprime mortgage contagion.

IMF estimated that at least $675 billion will be required to support their distressed capital bases.

IMF also slashed down its forecast for global growth to 3.9 percent in the year of 2008, down from its previous projection of 4.1 percent around four months ago.

In the year of 2009, the international agency expects the growth to be down at 3 percent from its earlier forecast of 3.9 percent.

However, both the IMF and World Bank are hopeful that the economies can be revived if the G-7 countries work through the financial crisis by tackling with bad assets, recapitalizing financial firms, and providing liquidity.

"I hope the G-7 meeting will point toward coordinated action to show that authorities are getting ahead of the curve," World Bank Group President Robert B. Zoellick said on Thursday in a statement.

"The actions need to be coherent and reinforcing, like the cut in interest rates by central bankers around the world this week. All these actions will still take time to work."

Strauss-Kahn said that there is a need to revamp the global financial architecture "to meet the need of 21st century globalized markets."