IMF $1trillion whip-around rumoured as WB cuts growth estimate

The International Monetary Fund will seek an extra $1 trillion to boost its lending resources on concern that a worsening in Europe's debt crisis will harm global growth, according to a Bloomberg article that sources an unnamed official.

This comes as the World Bank today annouced a revision in its growth forecasts for developed and developing countries. Global growth for this year is revised down to 2.5% from an estimated 3.6%.

The IMF revisions to global growth are expected next week. IMF chief Christine Lagarde said yesterday the IMF's $385 billion lending capabilities will be expanded as economies need to be 'protected' from Euro area risk.

The Eurozone's economy is expected to contract by 0.3% this year, according to the World Bank's report entitled 'Global Economic Prospects 2012'.

Developing countries growth projections for this year were revised down to 5.4% from estimates in June at 6.2%. 'High income' countries are forecast with 1.4% growth for this year compared with the previous 2.7% estimate.

'Developed- and developing-country growth rates could fall by as much or more than in 2008/09', said Andrew Burns, Manager of Global Macroeconomics and the report's lead author.

The report said that headline inflation in developing countries is expected to ease as commodity prices in some sectors such as metals are 25% below 2011 peaks.

The report comes ahead of expected IMF revisions to global growth next week and is available on the World Bank's website.