The International Monetary Fund (IMF) warned
that the world economy will shrink by one percent this year. That will be the first time the global economy has shrunk since World War II. The IMF is calling the current downturn The Great Recession.
Speaking in Tanzania, IMF managing director Dominique Strauss-Kahn said the economic downturn would be more severe than previously thought.
"The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes," Strauss-Kahn told African political and financial leaders in Dar Es Salaam.
"Continued de-leveraging by world financial institutions, combined with a collapse in consumer and business confidence, is depressing domestic demand across the globe, while world trade is falling at an alarming rate and commodity prices have tumbled."
Strauss-Kahn dubbed the downturn the "Great Recession". The world economy has not suffered an annual contraction since 1945. There appears to be broad consensus that the economic downturn will be much deeper and more protracted than most experts thought just a few months ago.
In January, the IMF predicted that the world economy would grow by 0.5%, which was already a sharp revision of its earlier prediction of 2.2% growth. That was based on 3.3% expansion in developing countries and 2% contraction in advanced economies.
The IMF is expected to announce fresh official projections later this month.
On the bright side, we now have a name for the downturn: it's The Great Recession, which is both catchy and suitably terrifying. On the downside, no one really wants to hear the IMF's official projections later this month, which are sure to be a major bummer.
