Description

The heady days of 2004-2007, when global GDP growth averaged about 5% per annum, seem like a distant memory now. Growth in most countries slowed in the first half of 2008 due in part to monetary tightening, the unprecedented rise in energy prices and dislocations in credit markets. However, global economic activity went into freefall in the fourth quarter of last year as credit markets froze up in the wake of Lehman Brothers’ failure. Industrial production in the OECD countries (i.e., the thirty most developed economies in the world) plunged 7.6% in November, the sharpest year-over-year contraction since records began in 1975.