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This massive amount includes $2.7 trillion at US financial institutions, up from the $2.2 trillion projected in January. According to the IMF, the projected losses have risen due to a deterioration of the economic outlook, especially in the United States.

According to research done by an international bank, the outlook has worsened, with the IMF forecast being revised from a 1.6-per-cent contraction in the US's real GDP in January to a contraction of 2.6 per cent in the subsequent mid-March forecast. Then, the April forecast, released on Wednesday, saw the outlook getting worse with the contraction of US real GDP revised to minus 2.8 per cent.

When compared to the Wall Street Journal's monthly survey of leading US economists, the IMF's economic outlook as of March was in line with the average forecast.

On a positive note, these economists' forecasts are now showing signs of a bottom. If we assume that US financial institutions' losses are actually the consequence of a worsening economic outlook, then they, too, could be set to improve, according to the bank's research.

Based on the IMF's Global Financial Stability Report, the latest IMF forecast for financial-institution losses is premised on US real-GDP growth (year on year) bottoming at minus 3.3 per cent in the third quarter this year.

The US economists as surveyed by the Wall Street Journal are, meanwhile, forecasting contractions of 3.5 per cent in the second quarter, 3.2 per cent in the third and 1.2 per cent in the fourth. In other words, they see the bottom coming at about the same time and level as the IMF.

If real-GDP growth is in fact set to bottom in the third quarter, financial-institution losses could peak at around the same time. At this stage, anyone looking to get a handle on where financial institutions losses are headed should probably keep close tabs on the economic indicators announced daily, according to the bank's study.

Again, if the economy starts showing signs of a rebound, we might then plausibly expect a peak in financial-institution losses.

Based on trends in the losses and loan-loss reserves that the four major US banks reported for the first quarter, the level of reserves was about the same as it was in the fourth quarter of 2008, but total losses had dropped.

Assuming that the IMF forecast is correct, earlier expectations for a quick recovery in the second half of this year may be dashed. In other words, the recession in the world's largest economy has yet to bottom out, so it's highly unlikely that US consumption will pick up any time soon.

This means export-dependent nations such as Thailand will have to accelerate their measures to boost the domestic economy, especially via government spending, since other engines of growth, namely consumption, private investment and exports, have been sputtering.

The Thai government's latest forecast shows that GDP could contract by 2 to 5 per cent this year, as both global economic and domestic political factors are worse than previously thought.

However, the government yesterday decided to lift the state of emergency in Bangkok and surrounding areas, imposed on April 12, reflecting a better grip on the security situation.

If there are no additional untoward incidents in the coming months, the Thai economic outlook should be heading for significant improvement.