World faces biggest downturn in 60 years

The International Monetary Fund (IMF) has revised its forecast for world growth this year to 0.5% - the lowest since World War II.

Its previous forecast, back in November, was for 2.2% growth but the organisation said the “scale and scope of the current financial crisis have taken the global economy into uncharted waters”.

While the news is grim for economies around the world, the IMF said the UK will see its economy contract by 2.8% this year - the worst of any western country.

The IMF is projecting that the global economy will see a gradual recovery in 2010, with growth improving to 3%.

Official figures confirmed last week that the UK entered a recession after Gross Domestic Product fell by 1.5% in the fourth quarter of last year, following a 0.6% contraction in the three months prior to that.

Meanwhile, more bleak news came from the Institute for Fiscal Studies (IFS) who claimed that the UK will be burdened with Government debt for over two decades.

Robert Chote of the IFS warned that taxes would have to rise or spending would have to be slashed in order to allow public finances to recover.

In the meantime, the International Labour Organisation (ILO) has warned that 51 million jobs may be lost throughout the world in 2009.

The United Nations agency said the worldwide unemployment rate could rise from 6% last year to 7.1%.

The organisation said the global economy is grappling with its worst downturn since the Great Depression.

A spokesperson for the ILO said if the recession deepens this year, as many are anticipating, the jobs crisis will deteriorate sharply throughout the world.

In related news, figures today have revealed that Spain’s economy is in recession for the first time since 1993.

Official figures from the Bank of Spain said Gross Domestic Product fell 1.1% in the last quarter of 2008, which followed on from a 0.2% decline in the previous quarter.

The euro zone as a whole entered recession in November.

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