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IMF Chief Economist says world faces six more years of hell

By Catholic Online (NEWS CONSORTIUM)
October 4th, 2012
Catholic Online (www.catholic.org)

If economic watchdog Olivier Blanchard says that the world is not even halfway through the long, slow economic recovery after the crash of 2008. Blanchard predicts it will take at least a decade for the world to fully recover, and that everyone needs to shore up for at least six more years of hard times.

LOS ANGELES, CA (Catholic Online) - Blanchard, chief economist at the International Monetary Fund, says "It is not yet a lost decade but it will surely take at least a decade from the beginning of the crisis for the world economy to get back to decent shape."

While Britain has finally emerged from the longest double dip recession since the Second World War, these latest warnings have come in a timely fashion.

The economy also grew by 0.6 percent between July and September, the first quarter of growth since the same period last year.

There is no shortage of bad news. The eurozone crisis still threatens to spiral out of control, the U.S. approaching a debt storm and the global economy slowing from China to Brazil - things look bleak.

Economist Gerard Lyons said: "Is the global economy heading into another recession?

"This is now becoming a genuine possibility. Business confidence has deteriorated. Worries about the euro appear to have been the trigger for this."

Blanchard says that adjustment in the euro zone required a decrease in prices in the bloc's indebted southern half, such as Greece and a rise in core countries.

Blanchard also says that Germany would have to accept higher inflation and a real strengthening of its purchasing power as part of the solution to Europe's problems.

Business Secretary Vince Cable admitted the turmoil was far from over.

"We are in a very deep crisis centered on the collapse of the banking system.

"Projecting and predicting how we get out of this crisis is very difficult indeed."

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