Trichet warns economy is not out of the woods
Tuesday 23 June 2009
The risks of of "sudden emergence of unexpected financial turbulence" could push the world economy even further into recession, according to the president of the European Central Bank.
"We are still in the downturn phase – a downturn that globally is proving to be the deepest since the Second World War," Jean-Claude Trichet said. "While there are first signs the pace of economic weakening is decelerating, we must remain alert. We are in uncharted waters."
His remarks came as the World Bank said the global economy will shrink 2.9 per cent in 2009, a downgrade from its previous forecast for a 1.7 per cent contraction, as the world’s financial institutions continue to try to repair their balance sheets.
The world economy is expected to grow by 2 per cent in 2010 and by 3.2 per cent in 2011.
The World Bank warned that some $1.2 trillion in external debts run up by emerging economies in eastern Europe, central Asia and elsewhere will soon need to be re-financed, placing strain both on those nations and on the western banks with exposure to them.
It said: “Although extraordinary policy responses by governments around the world have helped save the global financial crisis from systematic collapse, they have not, thus far, closed the negative feedback loop between financial instability and economic recession.”
Growth in developing countries is expected to stay positive but will slow from 5.9 per cent in 2008 to 1.2 per cent this year. The World Bank added: “The reversal of capital flows, the collapse in stock markets, and the general deterioration in financing conditions have brought investment growth in the developing countries to a halt.”
- 1 Man on naked bike ride gets ejected after becoming aroused
- 3 Ann Summers survey reveals the UK's favourite sex position
- 4 Jaden Smith wears gender fluid dress to high school prom with Hunger Games actress
- 5 How much sex should I be having?
Ed Miliband returns to the backbenches but it's all a bit awkward as he tries to avoid eye-contact with fellow Labour MPs
Man on naked bike ride gets ejected after becoming aroused
Charles Kennedy 1959-2015: A gifted, compassionate politician whose career was cut short by the 'demon drink' - latest news
Ayyan Ali: Pakistan's top model now appears in the courtroom rather than on the catwalk
Isis tortures 14-year-old Syrian boy and films it in graphic video for 'propaganda purposes'
Migrants in Kos: Photos show real tragedy after Brits abroad complain of 'awkward' holidays
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination
British tourists complain that impoverished boat migrants are making holidays 'awkward' in Kos
Michael Gove determined to scrap the Human Rights Act – even if Scotland retains it
Threat to scrap Human Rights Act could see UK follow Nazi example, warns UN official
Why this year's general election was the most unfair in Britain's history
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...
£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...
£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...
£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...