The International Monetary Fund (IMF) has called for global coordinated efforts to suppress financial market stress in an effort to avoid the current recession becoming even longer.

The IMF claims still more far-reaching efforts are needed by the developed and emerging market economies to limit the impact of the global downturn.

Yesterday the fund predicted the world economy would shrink by between 0.5 per cent and one per cent in 2009, the first outright contraction since the second world war.

Developed economies are expected to contract even more, by between three and 3.5 per cent.

And the United States’ economy will contract by almost the same amount, with the IMF predicting a 2.6 per cent decline, and a 3.2 per cent contraction for the Eurozone.

“Turning around global growth will depend critically on more concerted policy actions to stabilise financial conditions as well as sustained, strong policy support to bolster demand,” the IMF’s report concluded yesterday.

Restoring confidence in financial conditions was vital to resolving the crisis, the fund added.

The warnings came ahead of the G20 meeting next month where the global recession is expected to be a top priority.

The IMF report added: “Since financial market strains are global, greater global policy cooperation is crucial for restoring market trust.

“Delays in implementing comprehensive policies to stabilise financial conditions would result in a further intensification of negative feed-back loops between the real economy and the financial system, leading to an even deeper and prolonged recession.”