The OECD group of leading global economies and the World Bank today both issued bleak forecasts for world economic momentum ahead of this week's summit of G20 leaders in London.
The World Bank forecast 'unprecedented' declines in global economic output and trade volumes this year for the first time since World War II, warning that growth would also slow sharply in the vulnerable developing world.
The World Bank said the global economy would shrink by 1.7% in 2009, while the 30-member Organisation for Economic Co-operation and Development in Paris said its economies would see a contraction of 4.3% this year.
'The world economy is in the midst of its deepest and most synchronised recession in our lifetimes, caused by a global financial crisis and deepened by a collapse in world trade,' the OECD's CEO Klaus Schmidt-Hebbel said.
Growth in 2009 was forecast to contract 4% in the US, 4.1% in the euro zone and 6.6% in Japan, the OECD report said.
It said the downturn would continue into 2010, with the OECD area seen contracting by another 0.1% next year and only Canada and Germany of the rich G7 nations expected to show any growth.
The OECD also called on governments to step up stimulus spending to spark a recovery in 2010 likely to be 'muted' at best, echoing US appeals that have so far been brushed aside from leading EU states including France and Germany.
The Asian Development Bank, meanwhile, said that growth in Asia's developing economies would fall to 3.4% in 2009, adding that the short-term outlook was 'bleak' and that over 60 million people would remain mired in poverty.
The report said China, the major driver of the region's growth in the past decade, would expand by 7% this year, below Beijing's target of 8% seen as the minimum required to prevent mass unemployment.
Ahead of the G20 meeting, British Prime Minister Gordon Brown said world leaders must restore a sense of morality to global finances, while warning demonstrators who have promised to cause severe disruptions in central London.
As leaders set out their positions for the talks, Japan's Prime Minister Taro Aso said his country would 'play a leadership role' at the summit 'so that the world economy can gain smoother access to necessary capital.'
French President Nicolas Sarkozy raised the stakes, warning that France would not accept any consensus that ignored his demand for tighter financial regulation while playing down US calls for more stimulus spending.
