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8 predictions about the global economy during the financial crisis
Financial leaders from around the world have been forecasting where economies are heading because of the slowdown. Here are eight of them.
March 12, 2009 11:53 by Aarti Nagraj
1. “My guess is that [global economic] growth will probably fall about 1 to 2 percent,” World Bank President Robert Zoellick told the London-based newspaper the Daily Mail on March 12. “We haven’t seen numbers like that since World War Two, which really means the Thirties. So these are serious and dangerous times,” he added.
2. In the Global Economic Prospects 2009 report published by the World Bank on March 9, it predicted the global GDP for 2009 will fall to 0.9 percent, 5 percentage points below potential.
Food prices are expected to fall by 23 percent, and oil prices are expected to reach $75 a barrel in 2009.
3. The UAE’s inflation rate will drop to between 5 and 8 percent this year compared with 11 per cent in 2008, said Sultan bin Saeed Al Mansouri, the country’s Minister of Economy on March 9.
“The country’s economy is the least affected by the crisis. We are much better off than others,” he said, adding that country’s GDP will continue to grow in the current year as “the economy is very strong and stable.”
He also said that like the UAE, Dubai’s economy was sound and will weather the global financial crisis.
4. “The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes,” IMF’s managing director Dominique Strauss-Kahn said on March 10. He said that the global financial crisis can now be termed the “Great Recession.”
5. The UAE’s GDP is expected to grow at a rate of 0.5 percent in 2009 due to the global economic crisis, Marios Maratheftis, Standard Chartered Bank’s regional head of research for the Middle East, North Africa and Pakistan said on March 10.
“We expect to see a significant [economic] slowdown here in the UAE,” he said, adding that every sector will be hit by the crisis.
6. Interestingly, Sheikha Lubna Al Qasimi, the UAE’s Minister of Foreign Trade said on March 6 in Moscow that “The UAE’s GDP grew by 13.9 per cent to reach AED801 billion in 2008, and is expected to rise sufficiently this year to support development goals. The federal budget for 2009 rose by 24 per cent over last year.”
7. “(Dubai) rental prices will see a sharp decline of up to 30 per cent, down from an estimated 15 per cent rent rise in 2008,” the Egypt-based investment bank, EFG-Hermes said on March 10.
“We are forecasting that Dubai’s population will fall in 2009 as the outlook for most key sectors deteriorates and with the current correction in the property sector,” the bank said.
8. In February, the IMF predicted that the real GDP growth in the GCC will fall to 3.5 percent in 2009, from 6.8 per cent last year.
The falling oil prices will result in a drop of 300 billion (AED1.1 trillion) in government revenue, and force GCC countries to run a current account deficit, it said.