The International Monetary Fund (IMF) predicted today that potential losses from the credit crunch will reach $945bn (£472bn) or higher and said that losses were spreading to other sectors such as commercial property.

In its Global Stability Report published today it heavily blamed banks and inadequate government regulation for the credit crunch crisis and said that the failure to properly assess sub-prime financial risk meant losses were spreading to commercial property as well as consumer credit and company debt sectors.

It warned that tough measures and government intervention may be needed and said that ‘despite unprecedented intervention by major central banks, financial markets remain under considerable strain, now compounded by a more worrisome macroeconomic environment, weakly capitalised institutions, and broad-based deleveraging’.

The global economy’s overseer also said that the effect of the credit crunch was likely to be far more protracted than in previous downturns because of the level of securitisation and leverage in the financial system.

The report will be presented at the IMF’s spring meeting in Washington DC this weekend while it is expected that the IMF will downgrade its forecast for the world economy tomorrow and report that the US will experience a sharp downturn.