Global economy likely to be weakest in 2009

28 Dec 2008, 2103 hrs IST, PTI

LONDON: The year 2009 is likely to be the weakest year for the global economy
since the second world war, largely because of the recessionary trend in advanced economies, media reports says.

"Forecasters say 2009 is shaping up to be the weakest year for the global economy for decades, and possibly since the second world war," the Sunday Times said.

The International Monetary Fund (IMF), which has revised down its world forecasts twice since the summer, will shortly unveil new predictions that will show the global economy formally in recession, the report added.

According to Consensus Economics, on the basis of assessing economic growth using market exchange rates, global growth next year would be only 0.4 per cent, the weakest since 1945, dominated by the synchronised downturn in advanced economies.

The IMF has already said that 2009 would be the first year since the second world war when advanced countries would experience simultaneous recession, and emerging economies would contribute to the global economic growth.

Meanwhile, another British daily the Telegraph said, "HSBC has warned that global gross domestic product would contract in 2009, describing this as 'an extraordinary development in the modern era'. It predicts that next year will be the worst in peacetime both for rich countries and the wider global economy since the Great Depression."

HSBC is gloomy about Britain, and is predicting a 2.5 per cent drop in GDP in 2009, compared to 0.9 per cent in the US and 1.4 per cent in the Eurozone. The bank also predicts a rebound in world economic activity in 2010, led among advanced economies by America, the Sunday Times said.

However, HSBC predicts that "Britain will have a very subdued recovery."

In a separate report, the Sunday Times said that "this week the Oxford Economics consultancy is likely to disclose that the country (Britain) has suffered a sudden and savage slide down the global rankings".

According to Oxford Economics Managing Director Adrian Cooper, "The UK GDP per capita in 2009 will be 24 per cent lower than in America and will be over 15 per cent lower than in Japan, Germany and France."

As per Oxford Economics projections, worse is yet to come, because of the recession and the sliding pound". Cooper added, "Britons will no longer be among the richest people on the beach."