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40% of world’s economy is now in a recession

SHARE 40% of world’s economy is now in a recession

Not since the early 1980s have so many countries been in recession.

As the global financial crisis has spread, the economies of more and more countries have been dragged down, with a few possibly skidding into a damaging depression.The turbulence that began more than a year ago in the currency and stock markets of Southeast Asian nations has since spread to Russia and is now threatening Latin America. Only North America and Western Europe have so far been spared.

"About 40 percent of the world economy is either in or heading into a recession," said Nariman Behravesh, chief international economist at Standard & Poor's DRI in Lexington, Mass.

The causes of the crises are as varied as the countries themselves. But some of the common problems are heavily indebted banking systems, overvalued currencies, lofty government spending and excessive reliance on foreign loans.

"Crony capitalism," the close ties between government officials, bankers and favored companies, also is blamed for the economic woes in Asia.

Some countries, heavily dependent on commodity exports, have been battered by sharp declines in the prices of such raw goods as crude oil, copper and grains. Some have been caught up in the turmoil because of close trading ties with a country in distress. And still others have been shaken because of investor worries about putting money in any developing country, healthy or not.

On the wounded list are Japan's economy - the world's second-largest - and other one-time Asian high-fliers such as South Korea, Thailand and Hong Kong. Smaller economies such as New Zealand's also have been hurt. Oil producers Saudi Arabia, Venezuela and Nigeria, too, have been pinched.