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World Economic Situation and Prospects 2009

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The World Economic Situation and Prospects (WESP) is the definitive report of the United Nations on the state of the world economy. One of the most highly anticipated economic reports from the United Nations, it is jointly produced by the Department of Economic and Social Affairs, the United Nations Conference on Trade and Development and the five United Nations Regional Commissions. It provides an overview of recent global economic performance and short-term prospects for the world economy and of some key global economic policy and development issues.

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Global outlook

It was never meant to happen again, but the world economy is now mired in the most severe financial crisis since the Great Depression. In little over a year, the mid-2007 subprime mortgage debacle in the United States of America has developed into a global financial crisis and started to move the global economy into a recession. Aggressive monetary policy action in the United States and massive liquidity injections by the central banks of the major developed countries were unable to avert this crisis. Several major financial institutions in the United States and Europe have failed, and stock market and commodity prices have collapsed and become highly volatile. Interbank lending in most developed countries has come to a virtual standstill, and the spread between the interest rate on interbank loans and treasury bills has surged to the highest level in decades. Retail businesses and industrial firms, both large and small, are finding it increasingly difficult to obtain credit as banks have become reluctant to lend, even to long-time customers. In October 2008, the financial crisis escalated further with sharp falls on stock markets in both developed and emerging economies. Many countries experienced their worst ever weekly sell off in equity markets.

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