The World Bank warned developing countries today to prepare for the “real” risk that an escalation in the euro area debt crisis could tip the world into a slump on a par with the global downturn in 2008/09. Moving its 2012 estimate down to 2.5% would see global growth slow to a similar pace the world experienced during the Great Recession of 2008. See: World Bank slashes global GDP forecasts; outlook grim
Global growth peaked above 5% in the froth of the consumer credit bubble in 2006. This is no small downgrade from that plateau, or from the other still optimistic targets of the IMF and the OECD for global growth between 3.4 and 4% this year. We expect further downward revisions to follow suit soon.
And so belief begins. Hope for the best, but protect your capital for the worst.
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