IMF warns of Great Depression

AFP
December 23, 2008
LONDON (AFP) — Britain edged ever closer to a recession on Tuesday and the IMF’s top economist warned of a second Great Depression, as stock markets awaited fresh US growth data in the hope of some Christmas cheer.
Britain’s economy shrank by 0.6 percent in the three months to September compared with the previous quarter, against a previous estimate of 0.5-percent contraction given last month, the Office for National Statistics said.
The IMF’s top economist, Olivier Blanchard, meanwhile said governments around the world should boost domestic demand in order to avoid a Great Depression similar to the downturn that shook the world in the 1930s.

“Consumer and business confidence indexes have never fallen so far since they began. The coming months will be very bad,” Blanchard said in an interview with the French newspaper Le Monde. “It is imperative to stifle this loss of confidence, to restart household consumption, if we want to prevent this recession developing into a Great Depression,” he added.