Foreign Policy asked five observers who saw this economic crisis coming to assess what will happen to the global economy in 2009 (hat tip Mark Thoma). Here are two excerpts:
Last year’s worst-case scenarios came true. The global financial pandemic that I and others had warned about is now upon us. But we are still only in the early stages of this crisis. My predictions for the coming year, unfortunately, are even more dire: The bubbles, and there were many, have only begun to burst.
Before the year is over, no major region of the world will remain unscathed by recession. Indeed, I suspect that 2009 will go down in history as the first truly global recession of the modern economy.The other contributors--Robert Shiller, David Smick, and Dean Baker--offer similarly discouraging assessments for 2009. Ken Rogoff, however, tells us not to lose faith:
But, just as optimists were too sanguine in the boom, ultra-pessimists probably go too far in forecasting a depression around the corner. 2009 will be a tough year. Yet, absent a large-scale conflagration, there is a fair chance that 2010 will see a restoration of weak growth in the U.S., Europe, and Japan, and probably robust growth in most emerging markets. The U.S. economy may have lost a fair chunk of its mojo, but it will require a lot more bad luck and policy blunders to get to a second worldwide Great Depression.Thanks Ken for those encouraging words.