In some parts of the world, the governments have recognized that there is an economic problem that is hitting some people hard, the hardest being the consumers which are faced with constantly rising prices and higher inflationary outbursts.

Peter Spencer, Ernst & Young's chief economist, said: "Both on the high street and in the housing market, it will get a great deal worse before it gets better."

He added that the economy will struggle to avoid recession next year, with predicted GDP growth of only 1 per cent. "Our worry is that without the usual medication from the Bank of England, consumers will move from their current state of denial into a state of despair."

Ernst & Young's dismal forecast comes after Sir John Gieve, deputy governor of the Bank of England, warned that inflation is set to climb well over 4 per cent this year. He also admitted that a recession looks likely.

In Malaysia, the Government said it hoped that banks will not overreact and withdraw loan and overdraft facilities from businesses during these tough times.

“The global economy is volatile at the moment and people are concerned about an impending recession and inflation.

“In such a scenario, we hope banks do not overreact,” said Deputy Prime Minister Datuk Seri Najib Tun Razak.

“Of course, banks might need to adopt prudent measures in these times but I hope that they are not too drastic, resulting in bumiputra and non-bumiputra businessmen facing more pressure and difficulties,” he told reporters.

In Malaysia, Banks have started to sqeeze on credit card usage, limiting the free interest period and imposing additional interest on cards limits used. The automatic imposition of the interest on the usage of cards has raised the ire of consumers who said they rather use cash than credit cards and pay banks interest only to enrich them.  The authorities said they wanted to limit the people from abusing their credit cards by imposing higher penalties on late payments. This is indicative of tougher times for the Malaysian economy, sources said.

In the US itself, where the economic recession seem to have its roots, the Treasury secretary, Henry M. Paulson Jr., orchestrated a rescue effort for the nation’s two largest mortgage finance companies last week. Most of the attention was focused on the infusion of cash and credit that the government would provide. It shows the urgency to repair what has been damaged.

The US economy is definitely ravaged by the long 6 years of wars that the US has carried and is still carrying in Afghanistan, Iraq and its proxy war in Somalia. These has had tremendous effects on its economy. The G. W. Bush government, adamant, rejected the idea that wars were responsible for the US economic problems thus delayed the necessity to take actions to protect the locals.

The US has seen that jobs are disappearing, housing prices are plummeting, and paychecks are effectively shrinking as food and energy prices soar. There has been talks of the disturbing crisis hovering over Wall Street. Something has clearly gone wrong with the US economy and it is affecting the world's economy.

But how bad are things, really? And how bad might they get before better days return? Even to many economists who recently thought the gloom was overblown, the situation looks grim. The economy is in the midst of a very rough patch. The worst is probably still ahead, says editorialists and economists in the country.

Job losses will probably accelerate through this year and into 2009, and the job market will probably stay weak even longer. Home prices will probably keep falling, shrinking household wealth and eroding spending power.

Officially, the economy is not in recession either in Malaysia, the UK or the US but the fact remains that even in Dubai - the fastest growing economy on the planet in the recent years alongside China - a deep plunge in growth is expected while jobs are becomign scarce and the housing market is shrinking.

Even China's growth rating for the first three months of the year 2008 has fallen by 0.6 percent which is estimated to be of large impact for a country like China.

Singapore too has estimated that its economy is experiencing overheating in many sectors but the government remains unabated that all will be well. There is obviously a sense of deep and growing crisis worldwide but it depends on when the real announcement will be made that the economy of the world is suffering and really suffering!

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