Consequences of World Economy In 2009

Just think about the prospects for the economy in the year 2009. At the beginning of the year, there are hopes that this world might pull out of economic recession, however, by its end all hopes are dashed.

The pricking of the stock bubbles and housing, and the re adjustment of the global business between consumption in advance countries and the United States and savings in developing countries including China has been painful and rapid.

In December 2008, the World Bank announced slight growth of 0.8 per cent. However, immediately after three months, in March, they revised that figure down to 1.6 per cent decline. According to others, this could be a more than two per cent decline. This is a huge change at global level and represents a first drop in global growth of economy since the end of World War II. Moreover, it is expected that world trade would drop to a huge 6.3 per cent this year.

Central bankers and Governments have taken important measures in order to counteract the sudden slump, however, these measures will only help a little in developed nations of the world. Developing nations are in a better position. China's stimulus package is showing some impact and growth will continue to take place in China and all other BRIc countries, though at much slower rate than previous years.

However, none of these measures will stop unemployment rising. Most likely, the United States will pass 12 percent unemployment rate this year in conjunction with many other European countries.

Although, the rate of unemployment in developing nations of the world will be lesser, the relative poverty and sheer size of the population in countries such as Indonesia, China, Brazil and India means that there will be growth in social unrest, possibly leading to recruitment by terrorists and extremists.

Let whatever be the case, there will increase in volatility and no country is safe from the financial and economic shocks and their unforeseen outcomes.