Global Economy Retrenches

The global economic outlook has deteriorated rapidly during the last two quarters. The ongoing financial crisis has bled into the real economy as declines in asset values have cut into household wealth, yielding lower consumer demand. Consumers and businesses have also cut back or postponed expenditures and production amid the economic uncertainty, lowering consumption
and capital expenditures.

These worsening conditions led the International Monetary Fund to lower its global growth forecast in late January to 0.5 per cent for 2009, with a 3 per cent rebound in 2010. In a more recent release, The World Bank forecasted a contraction in the global economy for 2009. Both 2009 forecasts underscore the severity of the current situation, which would mark the worst
global performance since World War II.

“Copyright British Columbia Real Estate Association. Reprinted with permission.”