The world economy is likely to shrink this year for the first time in six decades. The International Monetary Fund projected the 1.3% drop in a dour forecast released today. That could leave at least 10 million more people around the world jobless, some private economists say. “By any measure, this downturn represents by far the deepest global recession since the Great Depression,” the IMF says in its latest World Economic Outlook. “All corners of the globe are being affected.”
The new forecast of a decline in global economic activity for 2009 is much weaker than the 0.5% growth the IMF had estimated in January. Big factors in the gloomier outlook: It’s expected to take longer than previously thought to stabilize world financial markets and get credit flowing freely again to consumers and businesses. Doing so will be necessary to lift the United States and the global economy out of recession.
The IMF’s outlook for the United States is bleaker than for the world as a whole. It predicts the U.S. economy will shrink 2.8% this year. That would mark the biggest such decline since 1946.
