It will be worse – and longer – Swan

Wayne Swan is warning that Australia now faces a much deeper and longer global downturn than previously expected.

The Treasurer was commenting on the latest IMF forecasts.

The IMF has forecast that the global economy will contract by ½ to 1 per cent in 2009, before staging a modest recovery in 2010.

This is a downward revision of 1 to 1½ percentage points from the IMF January World Economic Outlook. That was released only seven weeks ago.

Mr Swan said this shows just how rapid and severe this global recession has become.

The IMF also expects advanced economies will suffer deep recessions in 2009.

It says GDP across advanced economies now expected to fall by over 3percent in this year.

Emerging and developing economies are expected to grow by just 1½ to 2½ per cent in 2009, compared with growth of more than 6 per cent in 2008.

Mr Swan said the IMF had also seen massive falls in economic activity in the final quarter of 2008, with global GDP falling by an unprecedented 5 per cent, on an annualised. Basis.

On that basis, growth in advanced economies had contracted by 7 per in that time.

The United States had seen its economy shrink by 6 per cent.

And Japan’s GDP had fallen by a massive 13 per cent.

“Many emerging economies also contracted sharply due to falling external demand, tight financial conditions and tumbling commodity prices,” Mr Swan said.