Current recession is the deepest slump since World War II

With the global economy reeling under recession, the International Monetary Fund (IMF) on Wednesday said world output is projected to decline by 1.3 per cent in 2009, indicating that the slump is the deepest since World War II. However, it is expected to recover only gradually in 2010, growing by 1.9 per cent, the IMF said in its World Economic Outlook report released at its headquarters in Washington. "Achieving this turnaround will depend on stepping up efforts to heal the financial sector, while continuing to support demand with monetary and fiscal easing," it said. The IMF said advanced economies experienced an unprecedented 7.5 per cent decline in real GDP during the fourth quarter of 2008, and the output is estimated to have fall during the first quarter of 2009. It is not only the US which has experienced a sharp downfall, but also other economies of the world too have had the same fate, including the western Europe and advanced Asia, it said. Emerging economies too are suffering badly and contracted four per cent in the fourth quarter in the aggregate.
While there have been some encouraging signs of improvement since the G-20 Summit in London early this month, the report said confidence in financial markets is still low, weighing against the prospects of an early economic recovery. The April 2009 Global Financial Stability Report (GFSR) estimates write-downs on US-originated assets by all financial institutions over 2007-10 will be USD 2.7 trillion, up from the estimate of USD 2.2 trillion in January 2009. This is largely a result of the worsening prospects for economic growth.