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Expert predicts global economic slowdown

Expert predicts global economic slowdown
By Kabanda Chulu
Saturday October 11, 2008 [04:00]

IMF chief economist Olivier Blanchard has predicted a major global economic slowdown due to the financial crisis that is fast-spreading to emerging economies and developing countries.

And World Bank president Robert Zoellick has stated that there is need to come up with new ideas of solving economic problems such as the global financial crisis.

The 2008 International Monetary Fund (IMF) and World Bank annual meetings that begin today until Monday come at a time of unprecedented global financial turmoil, which is marked by the credit crisis in the United States.

Zambia’s finance minister Ng’andu Magande and Central Bank governor Dr Caleb Fundanga are among delegates to the IMF/World Bank annual meeting.

Releasing the IMF latest World Economic Outlook ahead of the annual meetings in the United States yesterday, Blanchard stated that the world economy is decelerating quickly due to the financial shock and the still-high energy and food prices.

He observed that emerging economies are still expected to provide a source of resilience since they were benefiting from strong productivity growth and improved policy frameworks.

“But the longer the financial crisis lasts, the more the emerging economies' growth is likely to be affected and many advanced economies are close to or moving into recession and the growth in emerging economies is also weakening after years of strong growth, though it will still drive global growth,” Blanchard stated.

He emphasized the importance of implementing joint financial and macroeconomic policies at this point to stem the negative momentum on multiple fronts.

“On the financial side, this implies the design of comprehensive programes to deal with systemic problems, while on the macroeconomic side, this implies the use of monetary and fiscal policies to support growth and break negative feedback loops between the financial and real sectors and with the right macro and financial policies, we can ride the storm and expect a recovery to start in the course of 2009,” Blanchard stated.

And Zoellick stated that the world needed to rethink the way it looks at global economic problems.

“There is need to create a new world economic steering grouping of nations because the current composition of the group of eight industrialised countries is applying old methods to tackle new challenges,” stated Zoellick. “Hence the new grouping should include emerging economic powers such as Brazil, China, India, Saudi Arabia, South Africa and the current G8.”

Earlier in the week during the finance minister’s forum, Magande called for protection of the smaller nations from the current global financial turmoil, adding that governments in developing countries cannot easily bailout their institutions.

Labels: IMF, OLIVIER BLANCHARD, World Bank, ZOELLICK

posted by MrK @ 3:54 AM