Washington - The global economy could shrink as much as 1 per cent this year, the International Monetary Fund said Thursday, adding its voice to a chorus of economists predicting the first worldwide contraction since World War II.

With most wealthy nations suffering deep recessions and a financial crisis driving down growth across the globe, the IMF slashed its forecast for 2009 to a contraction of between 0.5 per cent and 1 per cent. That is down from a January prediction of 0.5- per-cent growth.

In a critical report ahead of next month's Group of 20 (G20) summit of the world's major economies, the international financial watchdog painted a depressing picture of the state of the global economy and said the government response has been too little and come too late.

The report warned that many governments had not spent enough public funds to stimulate demand and were responding increasingly with protectionist measures that will further drive down global trade.

US and European efforts to stabilize the financial sector "still lack coherence and credibility," while deflation was becoming an increasing risk in richer nations.

The IMF predicted a small recovery in 2010 to growth of 1.5 per cent to 2.5 per cent - a level that is still considered a global recession by IMF standards. Whether even that forecast will hold up was placed squarely at the feet of government efforts to end the financial crisis.

"In the event of further delays in implementing comprehensive policies to stabilize financial conditions, the recession will be deeper and more prolonged," according to the report, which was presented to G20 finance ministers meeting on the outskirts of London last week.

Leaders from the world's 20 leading economies will meet in London on April 2 to coordinate their efforts to halt the economic slide. Cracks have emerged between the United States and Europe over whether the summit should focus on short-term stimulus or broader financial regulation to stop future crises.

The United States will shrink 2.6 per cent over 2009 and is unlikely to return to positive growth until the third quarter of 2010, the IMF said.

European countries that have adopted the euro will contract 3.2 per cent this year and Japan's economic output will tumble 5.8 per cent, wiping out the country's gains made over the last four years.

Emerging and developing countries will still post modest growth of 1.5 to 2.5 per cent this year, the IMF said.