Macro-economic scenario The massive derailment of the financial sector in the advanced economies has had a knock on effect on the world economy. The world output is expected to contract by 1.4 per cent in 2009, GDP in the advanced economies is projected to decline by 3.8 per cent in 2009 before growing by a meagre 0.6 per cent in 2010.
The GDP of US and the UK is forecast to witness a fall of 2.6 per cent and 4.2 per cent in 2009 before an anaemic recovery to 0.8 per cent and 0.2 in 2010, respectively. Euro area, on the other hand, is expected to shrink by 4.8 per cent and 0.3 per cent both in 2009 and 2010, respectively (WEO, 2009a).