World economic growth will fall to the lowest rate in more than 60 years

The International Monetary Fund predicts that the world economic growth will fall to 0.5% in 2009. 

Even though overall global economic growth was rather challengeable for world financial institutions, 2009 is expected to be the most challenging year for economies across the globe since World War II. The IMF is a global organization of 185 countries and it predicts that financial markets will remain under stress. Such financial situation will be until investors and consumers gain confidence that policy actions can help improve market conditions. Moreover, it is noted that it won’t change despite a cornucopia of credit-easing actions. However, IMF said the global downturn won't last too much longer, as 2010 should be much better. An anticipated recovery of the U.S. housing market in late 2009 should help support a recovery in the United States, and coordinated, sweeping financial market stimulus actions will help advanced economies grow 1.1% next year. The advanced and developing countries will experience and overcome the economic growth differently. So in advanced countries such as the United States, the euro-zone nations, Japan, Canada and the United Kingdom, gross domestic product is expected to shrink by 2%. However, household wealth will decrease and consumer demand will result in the first contraction of total advanced economies' GDP in the post-World War II era. What is about developing countries? China, India, the Middle East and Brazil will grow a combined 3.25% in 2009, down considerably from 6.25% growth last year. Falling export demand, lower commodity prices and financial constraints will lead to the slowdown.

The report also notes that the emerging economies are better prepared to financial recession. They have a stronger economic framework developed in recent years. And it will help them avoid the shock of serious, painful declines of past recessions. It is obvious that world economies will work on special stimulus packages. In order to help reverse the economy's course, several nations around the world with advanced economies have enacted fiscal stimulus plans. Such plans could cost as much as 1.5% of advanced economies' GDP in 2009. Moreover, they will cause additional financial measures. For example, the actions of those countries are expected to increase their debt levels to 7% of their GDP, up from 3.75% in 2008. It is reported that even those stimulus plans won’t be enough against financial recession. And it is highly recommended to make a massive coordinated effort to buy up troubled assets, a policy that has received much attention in advanced economies but wavering support in recent months. 

Source: money.cnn.com