The International Monetary Fund is predicting a "severe recession" of global proportions in 2009 and a "gradual" recovery in 2010. According to the World Economic Outlook, GDP will shrink by 1.3% in 2009 before growing again by 1.9% in 2010. These are brighter figures than those posted in January, when IMF analysts predicted a 1.8% drop in 2009 for the global economy and a 1.1% drop in 2010.
The world economy is likely to shrink this year for the first time in six decades.That could leave at least 10 million more people around the world jobless . "By any measure, this downturn represents by far the deepest global recession since the Great Depression," the IMF said in its latest World Economic Outlook. "All corners of the globe are being affected."
As negative factors in the outlook are mentioned : It’s expected to take longer than previously thought to stabilize world financial markets and get credit flowing freely again to consumers and businesses. Doing so will be necessary to lift the U.S., and the global economy, out of recession.
The report comes in advance of Friday’s meetings between the United States and other major economic powers, and weekend sessions of the IMF and World Bank. The talks will seek to flesh out the commitments made at a G-20 leaders summit in London last month, when President Barack Obama and the others pledged to boost financial support for the IMF and other international lending institutions by $1.1 trillion.
The IMF stated that international actions carried out to present achieved "limited" progress and that confidence in financial markets is "still low". Consequently it is calling for "decisive actions to restore financial stability" and "monetary and budget policies" capable of offering "strong and continued support to aggregate demand", such as "capital injections, introduction of measures to promote liquidity, softer monetary policies and budget stimulus packages".
The IMF also predicts that the US economy will shrink by 2.8% in 2009 and that it will flat-line in 2010, and says that the US will see two years of negative inflation, estimating that consumer prices will drop from +3.8% in 2008 to -0.9% in 2009 and -0.1% in 2010. The Euro-zone will instead suffer a 4.2% drop in GDP this year and a 0.4% drop in 2010, while inflation will drop from +3.3% in 2008 to +0.4% in 2009 and +0.6% in 2010. Japan’s GDP will shrink by 6.2% in 2009 before increasing by 0.5% in 2010, while consumer prices will pass from +1.4% in 2008 to -1% in 2009 and -0.5% in 2010.
Generally speaking developed economies will suffer a 3.8% contraction in GDP in 2009 and GDP will stay flat in 2010, whereas GDP in emerging economies will increase by only 1.9% in 2009 (compared to +6.1% for 2008) before rising by 4% in 2010.
NOTE: To access to the full [IMF document- World Economic Outlook- Crisis and Recovery- >http://www.imf.org/external/pubs/ft/weo/2009/01/index.htm]