The International Monetary Fund on Monday warned that the world economy will likely contract this year in a “Great Recession” and African leaders said the financial crisis could undo hard-won social-economic gains.
“The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes,” IMF Managing Director Dominique Strauss-Kahn told African political and financial leaders in the Tanzanian capital.
“Continued deleveraging 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,” Strauss-Kahn added.
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 3 percent this year, half the rate of the past five years.
That forecast may “even be too optimistic,” he said.
“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. We must ensure that Africa is not left out,” he added.
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The IMF chief warned that millions of people in Africa will be thrown back into poverty by the crisis, while fragile political systems will be tested.