More than half of the world’s countries have been plunged into recession by the credit crunch, a higher proportion than at any time since 1960, according to the International Monetary Fund, which warns today that the downturn is likely to be “unusually severe and long-lasting”, and will starve developing countries of resources.
As the world’s finance ministers prepare to descend on Washington for the IMF’s spring meetings next week, it offers a stark warning to politicians who claim to have spied green shoots.
“The combination of financial crisis and a globally synchronised downturn is likely to result in an unusually severe and long-lasting recession,” the IMF says, in two key chapters of its twice-yearly World Economic Outlook, published today.
The IMF was given a major role in rebuilding the global economy after the crash at the G20 summit, when world leaders agreed to triple its resources, to $750bn (£503.4bn).
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Comparing today’s downturn to 15 recessions over the past 50 years, the IMF finds that downturns following financial crises tend to be longer-lasting, and the subsequent recovery is often weaker, as battered banks rebuild their balance sheets.
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When many countries are involved, plunging into recession simultaneously, downturns also tend to be longer. This time, it finds that 65% of the world’s countries are in recession – more than at any other time since 1960.