Obama forecasts gloom as Brown comes to visit

By Daniel Trotta

NEW YORK (Reuters) - U.S. President Barack Obama forecast a dismal first quarter on Tuesday ahead of a visit by Prime Minister Gordon Brown, who is calling for a "global New Deal" to help rescue the world economy.

Obama joined leaders from the OECD group of developed countries and the International Monetary Fund in predicting a difficult way out of the crisis, which Federal Reserve Chairman Ben Bernanke said required still more bold steps to prevent a costly, long-term catastrophe.

"The economy's performance in the last quarter of 2008 was the worst in over 25 years. And frankly the first quarter of this year holds out little promise for better returns," Obama said in a speech.

Brown's visit to Obama is the first by a European head of state since the president took office on January 20. The leader is expected to press Obama for details on Washington's plans for fixing the U.S. financial sector.

"This is a global problem. It needs global solutions," Brown said, invoking former U.S. President Franklin Roosevelt's New Deal policies during the Great Depression in the 1930s.

The turmoil that world leaders face is worse than thought just over a month ago, the Organisation for Economic Cooperation and Development warned as world stock markets remained stuck at 12-year lows.

"The recession will deepen ... there's no doubt ... I think this quarter will be the worst quarter of all," Klaus Schmidt-Hebbel, chief economist for the OECD, told Reuters.

"(It will be) significantly deeper and more protracted -- meaning longer than what is embodied in the IMF forecasts," Schmidt-Hebbel said.