OTTAWA (AFP) - A "severe and precipitous fall-off" in global auto sales since September will persist through mid-2009, resulting in an eight percent drop in annual sales this year, a Canadian bank said Thursday.

"We expect the double-digit year-over-year declines (of recent months) to continue through the first half of 2009, amid a simultaneous recession in North America, Western Europe and Japan," said Scotiabank economist Carlos Gomes.

"Purchases are however expected to stabilize in the second half of 2009, limiting the slump in global car sales to an average decline of eight percent this year," he said in a statement.

Worldwide, year-over-year car sales declined five percent in 2008.

US vehicle purchases plunged 18 percent in 2008 but the drop was more severe in the fourth quarter.

US sales volumes are likely to remain around current levels in the opening months of 2009, "as declining real incomes offset some improvement in credit availability," said Gomes.

In Western Europe and Japan, vehicle sales are predicted to "remain weaker for longer." Economic activity across Europe continues to shrink alongside declining employment and the lowest consumer confidence since the early 1990s.

Emerging markets such as China and India, however, are expected to recover more quickly.

Gomes said the accelerated pace of monetary easing by central banks since October and stimulus packages introduced by several governments should help buoy economic activity by the second half of 2009.

"History indicates that growth in car sales normally resumes, at the earliest, about nine months after a sharp drop in short-term interest rates," he said.

"This reflects the fact that employment and income growth are the key drivers of vehicle sales and these variables are still in retrenchment mode."