World Economic Situation and Prospects 2009

The world economy is mired in the worst financial crisis since the Great Depression. What first appeared as a sub-prime mortgage crack in the United States housing market during the summer of 2007 began widening during 2008 into deeper fissures across the global financial landscape and ended with the collapse of major banking institutions, precipitous falls on stock markets across the world and a credit freeze. These financial shockwaves have now triggered a full-fledged economic crisis, with most advanced countries already in recession and the outlook for emerging and other developing economies deteriorating rapidly, including those with a recent history of strong economic performance.

In the baseline scenario of the United Nations forecast, world gross product is expected to slow to a meagre 1.0 per cent in 2009, a sharp deceleration from the 2.5 per cent growth estimated for 2008 and well below the more robust growth of previous years. At the projected rate of global growth, world income per capita will fall in 2009. Output in developed countries is expected to decline by 0.5 per cent in 2009. Growth in the economies in transition is expected to slow to 4.8 per cent in 2009, down 6.9 per cent in 2008, while output growth in the developing countries would slow from 5.9 per cent in 2008 to 4.6 per cent in 2009.