World Economic Situation and Prospects 2009
June 2009, New York.
The World Economic Situation and Prospects (WESP) 2009 has been published at a time when the world economy is still mired in the most severe financial crisis since the Great Depression.
WESPs of 2006, 2007 and 2008 had already warned of the risks for this to happen. All factors analyzed in those reports have now played out and have pushed the world economy into recession.
The report proposes that growth in world gross product (WGP) will slow to 1.0 per cent in 2009, a sharp deceleration from the rate of 2.5 per cent estimated for 2008 and well below the more robust pace in previous years.
While most developed economies are expected to be in a deep recession, a vast majority of developing countries is experiencing a sharp reversal in the robust growth registered in the period of 2002-2007, indicating a significant setback in the progress made in poverty reduction for many developing countries over the past few years. The prospects for the Least Developed Countries (LDCs), which did so well on average over the past years, are also deteriorating rapidly. Income per capita for the world as whole is expected to decline in 2009.
The report analyzes in detail the evolution of the global financial crisis during 2008 and the more fundamental factors that led to its build-up. It further assesses the impact on global economic activity, especially in developing countries. The synchronized slowdown in both rich and poor countries is further evidence that the until recently widely held belief that developing country growth would have been 'decoupled' from that in the United States and Europe was dangerously misleading. The report also reviews the policy actions so far taken worldwide in response to the global financial crisis.
This WESP recommends more forceful fiscal policy stimuli need to be taken in an internationally-concerted manner in order to prevent the world economy from falling into a much deeper and more prolonged recession. It further details a number of more fundamental reforms to the international financial system that are needed to reduce risks of a recurrence of such a devastating crisis in the future.