By Martin Khor* – South Centre
It is now clear that the world is slipping – or has already slipped – into a new economic downturn, and that this will have serious consequences for the developing countries. Indeed, some prominent economists have warned that this time the crisis will be more serious and more prolonged than the 2008-9 Great Recession.
Image: Jsquish | Wikimedia Commons
Firstly, a double-dip recession is now likely because of the sovereign debt crisis in the European region and the weakening of the US economy.
Secondly, the tools that helped the world quickly recover from the 2008-9 recession (fiscal stimulus and easy monetary policy) are no longer so easily available in the developed countries (or in some countries they are not available at all).
Thirdly, the kind of coordination of policy actions among developed countries (and several developing countries as well) that fought the last recession no longer seems to exist, at least in the immediate future.
A new global recession, or at best a downturn with slow growth, could thus be more prolonged that the short 2008-9 recession. The developing countries could thus face serious economic problems. In order not to be caught as helpless victims to the new crisis, they need to take three types of action:
HUMAN WRONGS WATCH 