IMF warns of world economic recession
Written by Kabanda Chulu and Chiwoyu Sinyangwe
Saturday, January 31, 2009 11:19:11 AM
INTERNATIONAL Monetary Fund (IMF) chief economist Olivier Blanchard has warned that the world economy is moving towards recession and will only grow by 0.5 per cent in 2009.
Releasing the 2009 World Economic Outlook (WEO) on Wednesday, Blanchard stated that the global economy was expected to come to a virtual standstill this year.
“I am a bearer of bad news, in the last three months, the global economy has taken a turn for the worse, as financial markets have remained under stress and global output and trade have sharply decreased,” Blanchard stated.
“We expect advanced economies to experience their sharpest contraction in the post-war period with the United States’ real economic activity to contract by one per cent, the Euro zone will contract by two per cent and two and half per cent for Japan and emerging and developing economies will also suffer serious setbacks, as a result global growth is projected to decline sharply to 0.5 per cent in 2009.”
Blanchard stated that the global financial crisis had taken an increasingly heavy toll which was penetrating through different channels across countries.
She stated that the crisis had also made it much more difficult and costly for consumers and firms to borrow, hence dragging down activity and trade and in emerging economies.
“Stronger policy actions are needed to restore the financial sector’s viability. We need more aggressive actions through a unified approach involving liquidity provision, capital injections and disposal of problem assets but there should be no ‘one size fits all’ policy mix since all countries have different fiscal and monetary space,” stated Blanchard.
Labels: GREAT DEPRESSION II, IMF, OLIVIER BLANCHARD
Read more...
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
Read more...
