World economy may face a bigger downturn: Dent

MELBOURNE: The world economy will face a crisis in the next two years even bigger than the downturn currently buffeting the global financial system, author Harry S Dent warned on Monday. Dent who predicted Japan���s slide into recession in the 1990s and the present slump, dismissed claims the worst was over for the world economy and that ���green shoots��� were emerging from the fiscal firestorm.

Dent said the baby-boomer generation was set to cut back on spending, sending the share and property markets into downward spirals that would dwarf the recent recovery. ���We���re in the middle of a bear market rally,��� Dent said. He added share markets were likely to continue to gain in the next few months, but would fall again towards the end of the year as the global banking system suffered another meltdown, bottoming out in 2011.

Dent said post-war baby boomers in the Western world were spending less as they aged, in a long-term demographic shift similar to that seen by Japan in the 1990s. ���Peak spending is age 46, so we���ve been saying for decades, we���re going to have this boom and then around the end of this decade baby boomers are going to peak in spending, prepare for retirement,��� he said. ���Kids are going to leave the nest and the economy���s going to slow.