The World Bank is now projecting that worldwide GDP will shrink in 2009, the first time that’s happened since World War II.
When thinking about economic distress, it’s important to try to distinguish between levels and rates of change. By all accounts, the economy in China is going to be healthier than the economy in the United States. Which is to say that China will have a higher rate of growth. But China is still a dramatically poorer country than the United States. And it’s going to be in poor countries like China where a downturn is truly painful. Those are also the places where you’re most likely to see economic crisis turn into really serious political crisis. And of course bad as the Great Depression was, the downturn itself wasn’t nearly as terrible as its political consequences—the rise of Nazism and the outbreak of World War II.