How Britain, Canada and Australia Are Responding to the Global Recession

What are governments of developed countries like those of Britain, Canada and Australia saying about the recession?

Developed countries are America's most important trading partners. For example, although Canada's population is only 20 million as compared with close to 300 nillion in the US, it is among America's three most important trade partners. In fact, American businesses export more to Canada than to any other country.

Here is how policy members in three countries are responding to the most recent report on world conditions issued by the International Monetary Fund.

The IMF now sees global economic activity increasing by 0.5% in 2009 but in general, the trend is downward, with the only gains coming from economies like India and China. The figures are lower than the ones issued two months ago in November.

The IMF report states that in a worst-case scenario, recorded unemployment could total 230 million, 7.1% of the world's labor force.

The Fund's managing director, Dominique Strauss-Kahn has warned that "If there's not a major restructuring of the banking system, all the money you can put into stimulus will just go into a black hole."

In response to recent IMF predictions, the lowest rate in 60 years, the Canadian government may need to change its earlier plans to get the country into a surplus position within five years. The IMF is now predicting a 1.2% contraction this year and an expansion of only 1.6% in 2010 instead of the 0.8% economic increase in 2009 and 2.4% in 2010 the Canadian government had been expecting.

In Australia, The Treasurer is saying that his country is in a relatively strong position to address its economic problems. In October, 2008, the Australian government enacted a stimulus package of $10 billion Australian dollars. If this sounds small, remember that for there are 15 Americans for every Australian.

For Britain, the IMF is now forecasting a drop of 2.8% as compared with 1.5% in the US. Britain's Institute for Fiscal Studies is currently saying government debt wll not return to earlier levels until 2029.

As usual, academic economists are also expressing their opinions about the current recession. Nouriel Roubini of New York University has been widely quoted as saying, "We have for the first time in decades a global synchronized recession. This is not you traditional minor recession."

Sources:

CBC News, "IMF Slashes Canada's GDP Growth for 2009 and 2010",January 28, 2009; www.cbc.ca

The Independent, "Economic Outlook Just Gets Worse and Worse,"January 29, 2009; www.indendent.co.uk

The New York Times Almanac (2007, p. 512)