Business | Economy
Depression fears overshadow G20 summit
The "D" word has crept into the debate ahead of the Washington G20 crisis summit. Not Deflation, but Depression.
- Reuters
- Published: 23:32 November 9, 2008
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Dubai: The "D" word has crept into the debate ahead of the Washington G20 crisis summit. Not Deflation, but Depression.
The result - according to the thinking of some officials, advisers and strategists gathered at a meeting of the World Economic Forum in Dubai - is that governments and central banks should throw caution to the wind and combat the crisis with every means available.
"There is a real possibility of a real, deep, international depression," said one senior monetary official, who spoke on the condition of anonymity, calling the crisis "the worst in 100 years".
Recession is now a certainty in leading western economies and the likelihood is increasing of deflation and even a global depression.
Last week, the International Monetary Fund warned the world's richest economies face their first year of contraction since World War II and leading central banks have resorted to drastic action.
The Bank of England shocked markets with a 1.5 percentage point rate cut and the European Central Bank cut by half a point, leading top central banks on a path toward the 1 per cent rate now set by the US Federal Reserve.
China, meanwhile, approved a 4 trillion yuan ($586 billion) government spending package to boost domestic demand and lift its economy.
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