The United Nations released part of their World Economic Situation and Prospects 2009 today. The chapter Global Outlook is available here (pdf) and the slide show summarising the Outlook is available here (pdf). I strongly recommend reading the slide show which should take about 5 minutes, and then continue to the chapter if you like.
It is sober reading – although the overall data indicates positive growth, the detail shows that standards of living will be put under pressure the world over. Unfortunately, it does not offer solutions, though it does highlight four areas of financial market reform related to global interconnectedness, regulation and liquidity, that might help prevent a similar crash in future. The full report, including regional overviews and detailed trends in global trade and finance, is due out in early January 2009. Here is a synopsis of the report:
The world economy is mired in the severest financial crisis since the Great Depression.
Growth in world gross product is expected to slow to 1.0% in 2009, a sharp deceleration from the rate of 2.5% estimated for 2008 and well below the more robust pace in previous years. While most developed economies are expected to be in a deep recession, a vast majority of developing countries is experiencing a sharp reversal in the robust growth registered in the period of 2002-2007, indicating a significant setback in the progress made in poverty reduction for many developing countries over the past few years. The prospects for the Least Developed Countries, which did so well on average over the past years, are also deteriorating rapidly. Income per capita for the world as whole is expected to decline in 2009.
The report analyzes in detail the evolution of the global financial crisis during 2008 and the more fundamental factors that led to its build-up. It further assesses the impact on global economic activity, especially in developing countries. The synchronized slowdown in both rich and poor countries is further evidence that the until recently widely held belief that developing country growth would have been ‘decoupled’ from that in the United States and Europe was dangerously misleading. The report also reviews the policy actions so far taken worldwide in response to the global financial crisis.
The report recommends more forceful fiscal policy stimuli need to be taken in an internationally concerted manner in order to prevent the world economy from falling into a much deeper and more prolonged recession. The WESP further details a number of more fundamental reforms to the international financial system that are needed to reduce risks of a recurrence of such a devastating crisis in the future.
See BBC report World economy ‘weakest since 30s’ here
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