The global economy is shrinking with economic growth falling below zero in several economies and world trade falling at an alarming rate, according to the International Monetary Fund (IMF).
IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes, IMF managing director Dominique Strauss-Kahn said.
''Continued deleveraging by the world's financial institutions, combined with a collapse in consumer and business confidence, is depressing domestic demand across the globe. World trade is falling at an alarming rate, and commodity prices have tumbled,'' he told the opening session of a two-day conference of African financial officials, business leaders, and academics in the Tanzanian capital of Dar es Salaam.
''Even though the crisis has been slow in reaching Africa's shores, we all know that it is coming-and its impact will be severe. This 'third wave' of the crisis, which is hitting low-income countries, will depress economic growth, put budgets under strain, and weaken external accounts. And the threat is not only economic: there is a real risk that millions will be thrown back into poverty,'' Strauss-Kahn said in prepared remarks.
He said the meeting was being held at a critical juncture, with the world facing what he dubbed a `Great Recession,' like the `Great Depression' of the 1930s.
The conference comes ahead of the meeting of the Group of Twenty (G-20) leading industrialised and emerging market countries in London on 2 April.
Strauss-Kahn said while the leadership role taken by the G-20 to provide a policy response to the crisis is encouraging, he was concerned that the grouping was not well equipped to hear the voice of Africa, or more generally, low-income countries.
''I, therefore, see this conference as an excellent platform for African countries to convey key messages to the G-20 leaders summit being held in London next month. In this conference, the IMF can be your voice,'' he declared.
Strauss-Kahn said Tanzania provided a good example of Africa's recent success story. ''Twenty-five years ago, it was an economy in severe distress, plagued by widespread shortages and high inflation. Today, Tanzania looks radically different: inflation is under control, and economic growth has averaged 7 per cent a year since 2000, increasing real per capita income by 50 per cent.''
In his address, the Tanzanian president Jakaya Kikwete said the impact of the crisis goes beyond the borders of the nations responsible. ''It is therefore important that creating effective mechanisms for surveillance of the international and national financial systems should be a matter of global interest. We too in Africa, though poor, have profound interest in the matter.
He said the mandate of the IMF for surveillance of economies should be strengthened. ''In carrying out this role, evenhandedness is very important. There should be no untouchable countries when it comes to financial impropriety and lack of effective regulatory framework because its consequences affect all of us.''
The IMF, meanwhile, pledged to help Africa get through the global economic crisis by providing extra funding and technical assistance, and offered to be the voice of Africa at coming talks of major industrial and emerging market countries in London convened to agree ways to combat the worldwide trade and business slump.
The session was also addressed by former UN Secretary General Koffee Annan.