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Global recession will be deep says IMF

The International Monetary Fund has released its bi-annual World Economic Outlook report with the dire summary that the world will undergo a deep recession that will affect every country. The report also predicted that “the current recession is likely to be unusually long and severe and the recovery sluggish”.

Analysis included:

  • Recessions brought on by a financial crisis are longer and deeper than those with from macro-economic problems.
  • Global recessions last longer and have weaker recoveries than those of a single country.
  • Expansionary fiscal policy, such as increased government spending and stimulus action, “seems particularly effective in shortening recessions associated with financial crises”.
  • Developing countries may have problems attaining finance, even following recovery, as global investors will remain risk averse for some time after a recession.

IMF managing director Dominique Strauss-Kahn said the outlook was grim for 2009: “We expect global growth to enter deeply negative territory. This is a truly global crisis, and nobody is escaping.”

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