Money Matters, Simplified.
World Bank revises estimates, predicts steeper contraction
by Jamie Anderson - June 12, 2009 - comments
The dueling forecasts, which are being revised from time to time, point to the fact that it is really difficult to envisage which way the downturn that has pummeled the well-to-do and the underprivileged countries alike is headed
Washington, June 12: The World Bank has revised its assessment of the global economic recession for the current year and has now projected that the world economy will shrivel “close to 3 percent” in 2009.
In its guidance released in March earlier this year, the Washington-based lender had projected a 1.7 percent contraction worldwide. The current figures will be part of the bank’s annual Global Development Finance report, scheduled to be released on June 22.
Slow paced recovery in 2010
Speaking prior to a meeting of finance ministers from the G-8 group of industrial nations, World Bank President Robert Zoellick said, “Waves of economic pain continue to hurt the developing world’s poor. Although growth is expected to revive during the course of 2010, the pace of the recovery is uncertain.”
Zoellick warned that the rate of recovery from the current economic downturn may be painfully slow, given the low capacity utilization and uncertainty about sources of demand.
"I personally believe you might be able to see some aspects of recovery in 2009 and 2010, but from a policy point of view, that isn't the core question because we have a large degree of uncertainty," Zoellick cautioned.
Need to safeguard developing countries
Zoellick said that the developed economies “seem to be contracting at a slower pace” which is not that bad a sign. The real cause of concern was the developing countries, which are likely to be pounded by the aftershocks of recession.
Zoellick urged the developed nations to come to the rescue of developing nations. He said, "There is much more we need to do in the coming months to mobilize resources to ensure that the poor do not pay for a crisis that is not of their making. There is a big price to pay if you don't support these countries."
In a separate release, the International Monetary Fund (IMF), the Washington-based lender with 185 member nations, raised the estimate of worldwide growth in 2010 to 2.4 percent, up from the previously estimated 1.9 percent growth. The monitor of global financial systems, however, stood by its 1.3 percent contraction forecast for the current year.