WASHINGTON, Dec 17: The IMF on Wednesday urged action to stave off a global recession as a record slash in oil output by Opec and a Wall Street baron’s court appearance underlined the strains in the global economy.

The call for industrialised nations to increase fiscal spending came after a record cut in US interest rates to almost zero failed to boost stock markets in Europe and Asia even though it sparked a big rally on Wall Street.

“My primary message is that additional — and vigorous — policy action will be needed to avoid a serious global downturn,” John Lipsky, deputy managing director of the IMF, said in New York.

In Germany, Chancellor Angela Merkel came under pressure after officials warned that Europe’s biggest economy could contract by as much as three per cent next year, which would mark the worst recession in its post-war history.

According to a Wednesday report in the Sueddeutsche Zeitung newspaper, Germany will also take on new debt of at least $42 billion in 2009, more than double the amount this year.

Economists warned that European countries faced the prospect of deflation after official EU data showed a drop in Eurozone inflation to a 14-month low of 2.1pc in Nov from 3.2pc in Oct.—AFP