The United States, at the center of an intensifying global financial storm, is now projected to contract by 2.8 percent in 2009, the International Monetary Fund (IMF) said Wednesday.

Anti-tax protesters hold a "TEA Party," which stands for "Taxed Enough Already," near the White House in Washington on April 15, 2009. [CFP]

"The biggest financial crisis since the Great Depression has pushed the United States into a severe recession," said the IMF in its latest World Economic Outlook report.

Despite large cuts in policy interest rates, credit is exceptionally costly or hard to get for many households and firms, reflecting severe strains in financial institutions, said the report.

"In addition, households are being hit by large financial and housing wealth losses, much lower earnings prospects, and elevated

uncertainty about job security, all of which have driven consumer confidence to record lows," it warned.

The world's largest economy is now projected to contract by 2.8 percent in 2009, "even though the rate of decline is expected to moderate in the second quarter," said the IMF.

It also said that the US economy will start recovering by the middle of 2010, noting that "average GDP growth in 2010 is projected to be zero percent."

Protesters hold up signs at a "tea party" anti-tax rally in Federal Plaza on April 15, 2009 in Chicago. [CFP]

The IMF called on the US government to take actions to stabilize the financial system.

"Prospects depend critically on policy initiatives to mitigate the severity of the recession and spur recovery," said the IMF.

"The most pressing policy issue is to restore the health of the core financial institutions," said the IMF at the report. "At the same time, it is important to stimulate private demand; lower the risk of asset

price overshooting on the downside, especially for house prices; and reduce uncertainty facing households, firms, and financial markets."

The semiannual World Economic Outlook report came a few days before the IMF and its sister institution World Bank will hold their spring meeting in Washington this weekend.

(Xinhua News Agency April 23, 2009)