Monday June 22, 2009
The World Bank said the global recession this year will be deeper than it predicted in March and warned that a flight of capital from developing nations will swell the ranks of the poor and the unemployed.
The world economy is forecast to contract 2.9 percent this year, compared with a prior estimate of a 1.7 percent decline, the Washington-based lender said in a report released today. Global growth will return next year with a 2 percent expansion, the bank said, cutting its forecast from a 2.3 percent prediction about three months ago.
The bank, formed after World War II to fund health and development projects in poor countries, said that while a global recovery may begin later this year, impoverished economies will lag rich nations in seeing any benefits. The lender called for “bold” policy actions to hasten a rebound and said prospects for rounding up aid for the poorest countries was “bleak.”
“While the global economy is projected to begin expanding once again in the second half of 2009, the recovery is expected to be much more subdued than might normally be the case,” the report said. “Unemployment is on the rise, and poverty is set to increase in developing economies, bringing with it a substantial deterioration in conditions for the world’s poor.”
The World Bank’s report raised concern about the shrinking amount of capital flowing into developing countries. After a peak of $1.2 trillion in 2007, capital flows this year are expected to fall to $363 billion, the report said.
“Investors’ flight from perceived danger contributed to the sharp drop in capital flows to the developing countries, a trend that is very likely to persist through the end of 2009,” the report said.
(Bloomberg)
The World Bank said the global recession this year will be deeper than it predicted in March and warned that a flight of capital from developing nations will swell the ranks of the poor and the unemployed.
The world economy is forecast to contract 2.9 percent this year, compared with a prior estimate of a 1.7 percent decline, the Washington-based lender said in a report released today. Global growth will return next year with a 2 percent expansion, the bank said, cutting its forecast from a 2.3 percent prediction about three months ago.
The bank, formed after World War II to fund health and development projects in poor countries, said that while a global recovery may begin later this year, impoverished economies will lag rich nations in seeing any benefits. The lender called for “bold” policy actions to hasten a rebound and said prospects for rounding up aid for the poorest countries was “bleak.”
“While the global economy is projected to begin expanding once again in the second half of 2009, the recovery is expected to be much more subdued than might normally be the case,” the report said. “Unemployment is on the rise, and poverty is set to increase in developing economies, bringing with it a substantial deterioration in conditions for the world’s poor.”
The World Bank’s report raised concern about the shrinking amount of capital flowing into developing countries. After a peak of $1.2 trillion in 2007, capital flows this year are expected to fall to $363 billion, the report said.
“Investors’ flight from perceived danger contributed to the sharp drop in capital flows to the developing countries, a trend that is very likely to persist through the end of 2009,” the report said.
(Bloomberg)
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