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DOHA BANK LIVE UPDATE ON WORLD ECONOMIC OUTLOOK: OCTOBER 2008
The World Economic Outlook October 2008 was briefed to the press by Mr. Olivier Blanchard, IMF Economic Counsellor with his team in International Monertary Fund (IMF), on the 8th October 2008 at the IMF Headquarters, Washington D.C., USA, in the sidelines of 2008 Annual IMF-World Bank meet.
On talking to our reporter from USA, Mr. R. Seetharaman, Chief Executive Officer Doha Bank said “The current world economic outlook report, placed today, provides us with the detailed analysis of the world economy; considering the issues affecting industrial countries, developing countries, and economies in transition. The report placed by Mr. Olivier Blanchard and his team has focused succinctly the scenario existing in the world economy, and has clearly emphasized the importance of implementing joint financial and macroeconomic policies not only to stem the negative momentum among the world economies but also calls for better implementation of monetary and fiscal policies to reduce the gap existing among the financial and real sectors'.
'Only with right macroeconomic and financial policies, the recovery from the current crisis is expected say in the course of 2009. The ongoing world economic downturn, faced due to this financial crisis, could be a major one since the 1930’s economic crisis. The sluggish growth among the world economies since mid-2008, owing to increase in the commodity prices, increase in oil prices and inflation, in my opinion is expected to continue in early 2009 too and I anticipate it to recover only say in the later part of 2009 at a gradual pace. Though inflation in advanced economies is easing owing to stabilization in commodity prices, the effect of inflation among emerging economies have sharply increased and I expect inflation to remain high until 2008 end. The 12-month inflation registered only an increase of 4.25% among advanced economies as against an increase of 8.25% among the emerging economies; similar high inflationary periods were experienced way back in late 1990s. In my assessment, the rising commodity prices, attributed significantly to this rising inflation among the world economies' Mr. Seetharaman said.
Mr. Seetharaman further said 'On a simple assessment, the advanced economies have grown only at 1% since Q4 2007 until Q2 2008. The emerging and developing economies have also not escaped from this downturn. In my opinion growth has been most resilient in commodity-exporting countries, while countries that relied heavily on bank-related or portfolio inflows to finance large current account deficits have been hit hard by this abrupt tightening of financing. The baseline projections on the global economy is undergoing a major downturn, with growth falling to its slowest pace since the 2001-2002 recession, although a gradual recovery is expected by late 2009. We will see the eventual recovery upon the unwinding of adverse terms-of-trade effects as commodity prices stabilizing; on turnaround in the U.S. housing market; and rising confidence upon resolution of the liquidity and solvency problems in core financial institutions. In my opinion considering the current circumstances, the world economic growth projected at 3% for 2009 as against 3.9% for 2008 and 5% for 2007, is realistic'.
In his concluding remarks, Mr. Seetharaman said 'One important aspect, also pointed out in this report, we all have to look into despite emerging economies slowdown at this point in time is that, the strong productivity drive and the improving policy frameworks among the emerging economies, including the Middle Eastern and GCC region, provides a vital source of resilience to the world economy'.
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