More hardships ahead

Kea Modimoeng

Kea Modimoeng

The International Monetary Fund's (IMF) forecast that the world economy is likely to suffer the "worst performance in most of our lifetimes" reflects what is really going on now, economists said yesterday.

Speaking at a gathering of African political and financial leaders in Tanzania yesterday, IMF managing director Dominique Strauss-Kahn, said: "The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes.

"Continued de-leveraging by world financial institutions, combined with a collapse in consumer and business confidence is depressing domestic demand across the globe, while world trade is falling at an alarming rate and commodity prices have tumbled," said Strauss-Kahn.

Stanlib economist Kevin Lings said it was true that the world economy hasn't declined so sharply since the world wars.

"The fact that such a forecast comes from the IMF gives it more weight because it also captures the reality that more than 70percent of developed markets are in recession," said Lings.

"The US, Japan, Germany, Italy, Spain and France are in recession. This is certainly a unique event which we are witnessing.

"The whole world is ultimately affected by the economic crisis."

As advanced countries focus on problems in their own economies, Strauss-Kahn called on the international community not to forget Africa, where regional growth is expected to slow sharply to three percent this year, half the rate of the past five years.

Strauss-Kahn warned the projection for three percent "may be too optimistic. "Even though the crisis has been slow in reaching Africa's shores, we all know it is coming and its impact will be severe," he said. "We must ensure that the voices of the poor are heard." - With Reuters