Page last updated at 10:11 GMT, Tuesday, 10 March 2009

IMF predicts a global recession

IMF boss Dominique Strauss-Kahn on 'life or death' crisis

The world economy is likely to shrink for the first time in decades this year, the head of the International Monetary Fund (IMF) has warned.

Dominique Strauss-Kahn's prediction is gloomier than that the IMF's current official forecast of 0.5% growth.

He added that trade was falling at an alarming rate and business and consumer confidence had collapsed.

He was speaking at a conference in Dar-es-Salaam, Tanzania, to discuss how Africa should respond to the crisis.

"The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes," Mr Strauss-Kahn said.

The World Bank, the IMF's sister institution, on Monday said it also expects the world economy to shrink in 2009.

'Severe'

Mr Strauss-Kahn also warned that Africa's economic growth will be affected by the continuing world downturn.

CRUNCH TIME FOR AFRICA
Zambia school children
World leaders will meet next month in London to discuss measures to tackle the downturn. Click here for our in-depth guide to the G20 summit.
Only one African country will be represented at summit - South Africa
This week BBC World News and World Service Radio will be examining how Africa is coping with the crisis, with reports from around the continent

The IMF predicts that growth in sub-Saharan Africa will slow to about 3% in 2009, half the growth rate it previously thought.

Mr Strauss-Kahn said even this rate may be "too optimistic".

"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 voice of the poor are heard. We must ensure that Africa is not left out."

The conference will discuss what external support the IMF and other Western donors may be able to provide to help mitigate the impact of the crisis on Africa, which has the highest poverty rate of any region in the world.

Not at fault

The IMF's managing director, Dominique Strauss Kahn, told the BBC on Monday that the conference would be a "milestone" and that he wanted to build a different kind of partnership with Africa, as well as providing additional funds.

Africa has little direct exposure to the credit crisis. Its banks have not invested much, if at all, in the problem financial assets at the heart of the crisis.

But the global downturn has undermined demand for many industrial commodities, which are important exports for several African countries. - including oil in Nigeria, Angola and Equatorial Guinea, and copper in Zambia.

Less than a year ago, the IMF's forecast for sub-Saharan Africa was economic growth of 6.7% in 2009, an increase on the 5% growth enjoyed in 2008.

Now the low growth forecast means that many African countries are likely to see very little increase in living standards, and could fall further behind in meeting poverty targets.

It says that 15 of the 21 countries which it judges most vulnerable to the crisis are in Africa.



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