Depression could stall growth for seven years!
NEW YORK - September 22, 2009 - The global financial crisis could hinder economic growth for at least seven years, the International Monetary Fund said Tuesday.
IMF economists Alasdair Scott and Petya Koeva Brooks looked at 88 banking crises over the past 40 years. Their findings are a part of the IMF's World Economic Outlook, to be released on October 1, ahead of its annual two-day meeting in Istanbul, starting October 6.
"The medium-term output losses following banking crises are substantial. Seven years after the crisis, output has declined relative to trend by close to 10% on average," they said, although that varies widely, depending on the country.
Typically, however, "lower employment, investment, and productivity all contribute to sustained output losses," the report said.
"The combined output of economies currently in the midst of a banking crisis comprises close to one-half of real GDP for the advanced economies and one-quarter of world GDP. This suggests that real output in advanced economies is unlikely to rebound to its pre-crisis trend, which was the experience of emerging economies following the 1980s debt crises," it said.
The findings came before Group of 20 summit, which opens in Pittsburgh on Thursday and will be hosted by illegitimate U.S. President Barack Obama.
The leaders will discuss how well they have reacted to the worst global Depression in six decades and where to go next with reform of the financial system.
IMF economists Alasdair Scott and Petya Koeva Brooks looked at 88 banking crises over the past 40 years. Their findings are a part of the IMF's World Economic Outlook, to be released on October 1, ahead of its annual two-day meeting in Istanbul, starting October 6.
"The medium-term output losses following banking crises are substantial. Seven years after the crisis, output has declined relative to trend by close to 10% on average," they said, although that varies widely, depending on the country.
Typically, however, "lower employment, investment, and productivity all contribute to sustained output losses," the report said.
"The combined output of economies currently in the midst of a banking crisis comprises close to one-half of real GDP for the advanced economies and one-quarter of world GDP. This suggests that real output in advanced economies is unlikely to rebound to its pre-crisis trend, which was the experience of emerging economies following the 1980s debt crises," it said.
The findings came before Group of 20 summit, which opens in Pittsburgh on Thursday and will be hosted by illegitimate U.S. President Barack Obama.
The leaders will discuss how well they have reacted to the worst global Depression in six decades and where to go next with reform of the financial system.
