ECONOMIC CRISIS

Global Economy in Crisis


The Marxist, XXVI 3, July–September 2010

PRASENJIT BOSE

It is widely recognized, even within the international economic policy

establishment, that the economic crisis which engulfed the global

economy since mid-2008 is the biggest since the Great Depression of

the 1930s. It has been over two years now that the crisis unfolded with

the bursting of the real estate bubble in the United States, leading to

widespread mortgage defaults and collapse of financial giants like

the Lehman Brothers. Since then, the financial crisis developed into

a deep recession in the US, eventually affecting the entire world

economy by the end of 2008. In 2009, world output experienced a

contraction, with GDP in the advanced capitalist countries taken

together falling by over 3%.1 This was the first annual decline in

world output in more than fifty years, leading to its official

characterisation as the ‘Great Recession’. World trade fell by over 10%

in 2009 from the previous year, which was the sharpest annual fall

since 1970.

CRISIS CONTINUES

In the first half of 2010, however, the IMF and the World Bank