IMF head Dominique Strauss-Kahn, seen in February, says 2010 can be 'a year of growth' if certain policies are put in place. (Riccardo De Luca/Associated Press)

The global economy will shrink this year as the world enters "a Great Recession," the head of the International Monetary Fund said Tuesday.

Speaking in a taped interview with French television channel France 24, Dominique Strauss-Kahn said economic data has worsened since January, when the IMF forecast global growth in gross domestic product of 0.5 per cent this year.

"Since then the news hasn't been good," Strauss-Kahn said. "I think that we can now say that we've entered a Great Recession."

Strauss-Kahn didn't make a precise forecast for global economic decline this year.

"This recession can last a long time," Strauss-Kahn added, "unless the policies we're expecting are put in place, in which case 2010 can be a year of return to growth."

The World Bank said Sunday that the global economy will shrink this year for the first time since the Second World War and that the global financial crisis will make it tougher for poor and developing countries to access needed financing.

Trade is forecast to fall to its lowest point in 80 years in 2009, as economic hardship ripples across the globe, the bank said. The most drastic trade slowdowns are expected in East Asia, where growth had been robust, the bank said in a paper prepared for a meeting of finance ministers and central bank officials this week.

The ramifications of the growing financial crisis on the world's poorest countries will likely remain for some time, the bank said. Because richer countries are borrowing more, developing countries are being squeezed out and many financial organizations that have provided financing to lower-income countries "have virtually disappeared."

In Europe, the European Central Bank has forecast a 2.2 to 3.2 per cent fall in gross domestic product over 2009 in the 16 countries that share the euro.

The euro-zone economy contracted by a record 1.5 per cent in the last three months of 2008, dropping even more sharply than in the United States as collapsing world trade hit the region's export-rich economies, figures showed last month.

The drop in output for the fourth quarter compared to the third was the biggest since the euro was created in 1999 and the third quarterly fall in a row.