World Bank Report Predicts Contracting Global Economy Will Hurt Poorest Countries
The World Bank released a report Monday, projecting “a 2.9 percent contraction in global GDP this year, as rich countries contract by 4.5 percent,” the Wall Street Journal reports. “The crisis of the past two years is having dramatic effects on capital flows to developing countries, and the world appears to be entering an era of lower growth,” World Bank Chief Economist Justin Lin said (Burns, Wall Street Journal, 6/22).
The report â€“ which was issued at a conference in Seoul, South Korea â€“ forecasts more dire predictions than those the World Bank made just months ago and contrasts with the views of “its sister organization, the International Monetary Fund (IMF) â€¦ which is forecasting a global contraction of only 1.3 percent this year and growth of 2.4 percent in 2010,” Bloomberg/Los Angeles Times reports. “[W]hile a global recovery may begin this year, impoverished economies will lag behind rich nations in benefiting,” the newspaper writes. “The lender called for ‘bold’ actions to hasten a rebound and said the prospects for securing aid for the poorest countries were ‘bleak'” (Bloomberg/Los Angeles Times, 6/22).
CNN reports, “Developing countries will be hit hard by falls in private investment â€¦ seeing nearly $1 trillion less in foreign investment this year than they did two years ago” (CNN, 6/22). “The real challenge is going to be to manage going through this period of very slow growth, to keep government programs that are critical for longer term growth (infrastructure, health and education policies),” Andrew Burns, acting manager of the World Bank’s Global Trends Team, told VOA News. Burns said that in response to the growing need, the World Bank “is stepping up lending to the region” â€“ with plans to lend about “$33 billion this year and next year” (DeCapua, VOA News, 6/22).