Obama Presidency

World Economy Set to Shrink for 1st Time since 1940s

| by Reason Foundation

In a bleaker assessment than those of most private
forecasters, the World Bank predicted Sunday that the global economy
would shrink in 2009 for the first time since World War II.

The
bank did not provide a specific estimate, but bank officials said its
economists would be publishing one in the next several weeks.

Until
now, even extremely pessimistic forecasters have predicted that the
global economy would eke out a tiny expansion but had warned that even
a growth rate of 5 percent in China would be a disastrous slowdown,
given the enormous pressure there to create jobs for the country's
rural population.

The World Bank also warned that global trade
would contract for the first time since 1982, and that the decline
would be the biggest since the 1930s.

Whole IHT story.

And things ain't so rosy according to the International Monetary Fund, either. From a Wash Post story:

Some
fear that nations in Western Europe such as Austria, Ireland and
Spain—believed to have graduated from IMF lifelines decades ago—may
soon require bailouts, taking funds that would have been spent on
poorer nations. It could also prove difficult to raise more money from
hard-hit countries including the United States and Britain, where
politicians and citizens may decide that charity begins at home.

"I'm
worried about what happens when you see that a Greece or an Ireland
that might need bailouts," said Simon Johnson, an MIT economics
professor and former IMF chief economist. "Where is the money going to
come from?"

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