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"The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes," Strauss-Kahn said. (Reuters) |
DAR-E-SALAAM — The International Monetary Fund (IMF) stressed on Tuesday, March 10, that the world was in the grip of the "great recession," warning that Africans are at a particular risk from the global meltdown.
"The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes," IMF chief Dominique Strauss-Kahn told African finance attending a conference discussing how Africa should respond to the crisis.
"When we release our next package of forecasts at the spring session, that is to say in April, everything leads us to believe that it will indeed reveal a negative global growth for the first time in 60 years."
The IMF chief described the global financial crisis as "the great recession," excluding any chance of a global recovery before 2010.
US Federal Reserve chief Ben Bernanke said Tuesday that the world was grappling with "the worst financial crisis" since the Great Depression in the 1930s.
The World Bank, the IMF's sister institution, said on Monday, March 9, it expects the world economy to shrink in 2009.
Stock markets worldwide hit their lowest levels in decades on Tuesday.
Japan's Nikkei stock index closed down 0.44 percent after another sell-off on Wall Street, hitting the lowest level since October 1982 for a second straight day.
In the US, where the crisis first erupted, stocks tumbled in choppy trade to 12-year lows overnight, with the Dow Jones Industrial Average dropping 1.21 percent.
A financial firestorm swept the US and the world in September after the demise of Lehman Brothers, one of the US's Wall Street giants.
Since this, the crisis has knocked down many major companies worldwide, causing mounting job losses, falling household wealth and forcing consumers to hold back on spending.
Africa at Risk
The IMF, world's leading financial watchdog, warned that Africa would be particularly hard-hit by the global recession.
"Even though the crisis has been slow in reaching Africa's shores, we all know that it's coming and its impact will be severe," said Strauss-Kahn.
The IMF stressed that tumbling trade, declining remittances and dwindling foreign investments were piling pressure on Africa.
It predicts that growth in sub-Saharan Africa will slow to about 3 percent in 2009, half the growth rate it forecast last year.
"Even this could be too optimistic if the crisis deepens," warned Strauss-Kahn.
"Africa is now on the front line," agreed former UN chief Kofi Annan, currently chair of the Africa Progress Panel.
Many of the 300 participants in the conference pointed out that single private firms in the Western world had received bail-outs larger than the financial support for the whole of Africa.
"At a time when the international community is finding hundreds of billions of dollars for crisis resolution, I cannot accept that we will not be able to find hundreds of millions for low-income countries," said Strauss-Kahn.
"We must ensure that the voice of the poor is heard. We must ensure that Africa is not left out."
The IMF chief fears that the threat to Africa will not be only economic, with millions of Africans at the risk of being pushed back into poverty and conflict.
"This is not only about protecting economic growth or household incomes, it is also about containing the threat of civil unrest, perhaps even a war. It is about people and their futures."
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