By: Timothy R. Homan
Source: bloomberg.com
The World Bank said Monday that the world economy will contract by 2.9 percent, more than the initial forecast of 1.7 percent decline. The Washington-based institution warned that there would be capital flight from developing countries, thus leading to increased poverty and unemployment. The Bank is forecasting that growth will be 2 percent next year, down from 2.3 percent which was earlier predicted.
The bank, formed after World War II to fund health and development projects in poor countries, said that while a global recovery may begin this year, impoverished economies will lag behind rich nations in benefiting. The lender called for “bold” actions to hasten a rebound and said the prospects for securing aid for the poorest countries were “bleak.”
“The recovery is not going to be V-shaped,” said Alvin Liew, an economist at Standard Chartered Bank in Singapore. “We may see slower consumer demand over a prolonged period.”
The bank is more pessimistic than its sister organization, the International Monetary Fund. The IMF, which is forecasting a global contraction of only 1.3 percent this year and growth of 2.4 percent in 2010, said June 19 that it plans to revise estimates “modestly upward.”
World Bank Says Global Economic Recession to Deepen
