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The World Economy: The global cost of delaying bank stability

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  • Holland, Dawn
  • Barrell, Ray
  • Fic, Tatiana
  • Hurst, Ian
  • Liadze, Iana
  • Orazgani, Ali
  • Pillonca, Vladimir

Abstract

In October 2008, we were already projecting that 2009 would see the worst recession in the OECD economies since 1982, and if the resolution of problems in the banking sector were to be delayed then the outcome would be much worse. We are now facing the deepest global recession in post-war history, with global growth of just ½ per cent expected this year. Output in the OECD group of economies is projected to decline by 1.8 per cent this year, with annual declines in output anticipated in all the G7 economies, even after all fiscal stimulus packages are taken into account. We estimate that about 0.8 per cent of global GDP, or roughly $550 billion, will be lost this year due to the delay in restoring capital adequacy in the banking sector in the major economies over the past three months.

Suggested Citation

  • Holland, Dawn & Barrell, Ray & Fic, Tatiana & Hurst, Ian & Liadze, Iana & Orazgani, Ali & Pillonca, Vladimir, 2009. "The World Economy: The global cost of delaying bank stability," National Institute Economic Review, National Institute of Economic and Social Research, vol. 207, pages 10-17, January.
    • Handle: RePEc:cup:nierev:v:207:y:2009:i::p:10-17_4
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