A "Great Recession" was predicted yesterday by the director-general of the IMF, Dominique Strauss-Kahn. The IMF chief explained that the economic data has worsened since January, when the IMF forecast global growth of 0.5 per cent this year, kept positive by relatively bullish performances from emerging nations such as China and India – the advanced economies are already predicted to decline.
"Since then the news hasn't been good," said M. Strauss-Kahn. "I think that we can now say that we've entered a 'Great Recession'."
M. Strauss-Kahn declined to make precise forecasts, and the IMF's considered view will be unveiled at its spring meeting in Washington later in April. "This recession can last a long time unless the policies we're expecting are put in place, in which case 2010 can be a year of return to growth," M. Strauss-Kahn added.
The World Bank has already predicted that the world economy will contract. Such comments as those coming from the IMF and the World Bank in recent days provide a grim backcloth to the upcoming G20 summit of the world's leading economies, to be hosted by Gordon Brown in Downing Street starting on 2 April.
The meeting may not be as productive as is hoped by the Prime Minister: Fresh differences of opinion between European leaders and the US administration emerged yesterday, as the chair of the EU's finance ministers , the Luxembourgeois Jean-Claude Juncker, remarked that "recent American appeals insisting that the Europeans make an additional budgetary effort to combat the effects of the crisis were not to our liking".
Mr Juncker's scepticism about the US administration's approach, set out by the presidential adviser Larry Summers this week, was echoed by the president of the Bundesbank, Axel Weber. "The expectation that we could neutralise this synchronised recession through short-term fiscal policy measures is false. We should not even try. There will be costs," he said.Reuse content