A leading economist has warned that the world could face five years of economic slowdown and a 10 percent decline in output. DeAnne Julius, chairman of think tank Chatham House, said there was a 40 percent chance of such a lengthy slowdown. Speaking at a G20 breakfast seminar organized by BBC News, she said an earlier recovery would depend on plans to restore banking lending. Official forecasts have been much more optimistic, suggesting that the world economic recovery could begin as soon as next year. The IMF, for example, suggests that the world will grow by 1.5 percent to 2 percent in 2010 after declining by 0.5 percent to 1 percent this year. DeAnne Julius' pessimistic outlook was shared by businessmen from G20 developing countries who took part in the seminar. Igor Kalashnikov, who runs a double glazing company in Russia, said business was down two and a half times and there was a climate of pessimism among the media and policy makers. And Nish Kotecha said that Indian start-up companies were finding it hard to get access to funding to expand their business. Oktay Gokyildirim, who imports sweets into Turkey, said he has been badly affected by exchange rate fluctuations, but hoped that the G20 summit would give a boost to business and consumer confidence. Other participants warned that politicians were building up too high expectations on the outcome of the G20 summit of world leaders, which takes place in London next week. World leaders will meet next week in London to discuss measures to tackle the downturn. See our in-depth guide to the G20 summit. The G20 countries are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the US and the EU. Jim O'Neil, the chief economist of Goldman Sachs, said that it was unrealistic to expect countries to agree coordinated action to fight the downturn by increasing government spending. Budget decisions would remain under control of national Parliaments, he said, and central banks, which were now mostly independent of governments, would also take their own decisions. He was also skeptical about the G20's ability to move to an international system of financial regulation. Without better national regulation, any attempt at international standards was doomed to failure, he reasoned, insisting that neither the US nor China would be prepared to have their banking regulations dictated by a new international body. But O'Neil, who coined the term Brics to describe the fast-growing economies of Brazil, Russia, India and China, said that the summit could be very important for changing the way the international economy was run.He said he was very encouraged by the preliminary agreement at the G20 finance ministers meeting to restructure international financial institutions such as the International Monetary Fund (IMF) to give more power to countries such as China, and to increase the resources of the IMF to tackle the crisis. The G20 was in danger of ignoring the needs of the world's poorest, said Vassi Naidoo, a partner in accountancy firm Deloitte who has worked widely in Africa.
