IMF & WB Predict Global Crisis will get Worse
Third World Countries and Bigger Economies to Face Deep Recession
Apr 22, 2009
The current state of the global economic crisis gives no hope. As reported by the BBC, the International Monetary Fund (IMF) has predicted that the global economy is set to decline by 1.3% in 2009 as opposed to earlier prediction that the world economy will be growing at a marginal rate of 0.5% in 2009. The projections are that in 2009, major global economies like the UK, Japan, Germany and Italy, will decline by 4.1, 6.2, 5.6 and 4.4 percent respectively.
The prospects for these major economies for 2010 are not brighter either with an overall growth rate pegged at zero percent. With output in major economies falling by an alarming 7.5% annual rate, for the last quarter of 2008, the BBC reports that the IMF predicts the same rate of decline in the first quarter of 2009.
Impact of Global Crisis on Africa
With world trade figures predicted to decline by 11% in 2009, the impact of the global crisis on poor African countries and other similar economies in the Third World, can only be devastating. Vice President of the World Bank (WB), Ms. Obiageli Katryn Ezekwesili, has hinted that Africa has to be getting itself ready to face the tougher conditions that will be occasioned by the global economic downturn.
Addressing journalists from 22 African Member states of the World Bank via video conferencing, Ms. Ezekwesili said the Bank has cautioned Africa about the difficult times ahead. The Vice President told Journalists that the Bank has recommended the adoption of tough financial policies that will propel economic growth in African economies.
Bail Out Package for Africa
Bail out packages may not be a new thing in Africa. For years, poor African countries have continued to receive such packages in the form of Foreign Aid, Grants and Loans. While many continue to ponder over why foreign aid have failed to develop Africa, the World Bank says the current world conditions will result in a reduction in foreign direct investments, and aid from developing partners who are themselves trapped in the web of the financial crisis.
The situation may after all be good for African countries, for, as pointed out by the World Bank Vice President, a lot of work has to be done by African countries themselves. The current situation, therefore, presents an opportunity for Africa to assert its economic independence. For a moment, African leaders may spent some time reflecting on how to tackle corruption and how to judiciously spend the little support from donor organisations.
World Bank and IMF Support for Africa
The Bank, IMF and other donor organisations may continue to support Africa, but it is obvious that unless practical steps are taking by the continent’s leaders, the support will make no impact. As Ms. Ezekwesili emphasised, “No matter the level of foreign aid to help Africa, a lot of the work is needed by the countries themselves.” She advised that growth initiatives should be focused on the areas of health and education.
Meanwhile, the Bank has announced that its investments in safety nets and social protection programs in health and education, are expected to be as high as $12 billion, over the next two years.
Solution to the Global Crisis
The IMF predicts that as it stands now, hope for an improved 2010 global economy can only come from a significant recovery in the economies of emerging and developing markets. A resuscitated US economy is also crucial for seeing an end to what now appears to be early warning signs of a looming depression.
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