Olivier Blanchard, the chief economist for the International Monetary Fund, confirmed on Wednesday that the world economy is facing a major downturn, but added that the chances of it sliding into another Great Depression were ‘nearly nil’.

The IMF's World Economic Outlook projected that the global economy, which grew by a hardy 5 percent last year, will lose considerable speed, slowing to 3.9 percent this year.

It is forecast to weaken even further to just 3 percent next year, marking the worst showing since 2002.

"The world economy is facing a major downturn. While there is exceptional uncertainty at this point, our best forecast is that world growth will be around 3 percent in 2009,” said Blanchard.

The Organization's World Economic Outlook says the United States, the epicentre of the financial meltdown, will continue to lose traction.

”We project that growth in advanced countries will be very close to zero or even negative until at least the middle of 2009," said Blanchard.

However, Blanchard is almost sure that the world won’t see another Great Depression. "The sense of urgency that markets are basically making extremely clear is going to force governments to basically adopt fairly coherent plans in the very near future. Under that assumption I believe that the risk of a Great Depression is nearly nil," he stressed.