The global economy was already on the brink of recession before the September 11th attacks on the United States and now faces an even worse prognosis, a new International Monetary Fund report revealed yesterday.

The IMF's flagship World Economic Outlook publication, which takes the pulse of the world's economies twice a year, forecast economic growth of just 2.6 per cent for 2001. Economists view worldwide growth of 2.5 per cent as a level indicative of a global recession. This new forecast factors out the attacks which were too recent to be fully analysed, but it was already sharply lower than an April estimate of 3.2 per cent and well below the 4.7 per cent global expansion the world enjoyed last year.

The IMF forecast reflected a delayed US recovery, a sharp European downturn and a Japanese economy on the brink of recession. Since September 11th, most Wall Street economists have downgraded their global forecasts to growth of less than 2.5 per cent.

But the IMF said growth would remain just above recession levels at 2.6 per cent this year. And the international lender is more optimistic about 2002, hoping that lower interest rates and other policy actions taken to counter the effects of the attack will produce a robust 3.5 per cent expansion in 2002.