Global economic growth could dip below zero for the first time in decades in 2009, International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn said today Tuesday.
The global financial crisis that has slashed international trade can now be termed the "Great Recession," Strauss-Kahn said in a speech to African central bank governors and finance ministers in Dar es Salaam, Tanzania today. "The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes," he also said "Continuing deleveraging by world financial institutions, combined with the collapse in consumer and business confidence is depressing domestic demand across the world."
The IMF had forecast in January that the global economy would expand 0.5 percent this year. The World Bank said in a March 8 report that the international economy was likely to shrink for the first time since World War II, and trade will decline by the most in 80 years.
In related news, it was also reported that "The International Monetary Fund (IMF) has urged donor countries to honor their commitment to African countries in the face of the global economic downturn".
The IMF chief pledged that it was not only a moral obligation but also a legal obligation for developed world to assist Africa and to form a new partnership with Africa through which the developed and developing worlds work together but led by African countries to better achieve the potential of the continent.
The gains of the past decade, during which many countries in sub-Saharan Africa saw sustained high rates of economic growth and rising income levels, are at risk,' IMF Africa Department Director Antoinette Sayeh said. The continent was relatively spared by the first phase of the global downturn last year but a bitter cocktail of dwindling remittances, shrinking export markets and looming investment cuts are beginning to cripple the world's poorest continent.
"It's a big shock," Sayeh told the FT, adding that the IMF's growth forecast of 3.25 percent could be revised down further if the world economy appeared set to contract.Even at its current level the forecast was below the population growth rate of many places, she pointed out. "So you won't see an increase in real per capita growth in some countries. You may see a decline. That's a major change from the recent past."
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