Financial turmoil that is prompting unprecedented policy responses will reduce global economic growth, but will not prevent the start of a recovery in 2009, a top International Monetary Fund official said on Wednesday. John Lipsky, the IMF's first deputy managing director, said the turmoil roiling markets has justified a "modest reduction" in the IMF's baseline forecast for global growth, but a recession can be avoided.
"Notwithstanding the very real risks and concerns, my message today is, on balance, positive." Lipsky said in prepared remarks to a University of California-Los Angeles economic conference. "According to IMF analysis, the latest challenges have not altered our core expectation of a gradual 2009 growth recovery. In particular, a global recession can be avoided, provided that coherent and effective policy responses are implemented around the world," he said.