The World Bank's latest Global Economic Prospects report predicts the world economy will shrink by 1.7 percent in 2009, with uncertain prospects of a weak recovery in 2010. Growth in developing countries is set to fall to 2.1 percent in 2009, down from 5.8 percent in 2008.
OECD countries will be hardest hit by the crisis, contracting by 3 percent on average in 2009 according to the report. The Bank predicts Japan's economy will slump by 5.3 percent, the Euro area by 2.7 percent, and the United States by 2.1 percent.
The forecasts are significantly gloomier than the World Bank's November 2008 predictions for 2009, when it saw the world economy as a whole growing by 0.9 percent and developing countries by 4.4 percent.
The Bank qualifies its forecast of a modest recovery in 2010 as "highly uncertain" and warns that unemployment will continue to rise whether or not growth resumes. Should problems in the banking sector persist, the Bank says, another year of stagnation or decline will follow.
"Even if global growth turns positive again in 2010, output levels will remain depressed, fiscal pressures will mount, and unemployment levels will rise further in virtually every country well into 2011," said Hans Timmer, of the World Bank's Development Prospects Group
Among developing countries, those in Europe and Central Asia are forecast to be worst hit with GDP contracting by 2 percent, a downward revision of nearly 5 percent from the Bank's November 2008 prediction of 2.7 percent growth. Russia, hit by falling oil prices will see its economy shrink by 4.5 percent.
Latin America and the Caribbean is seen contracting 0.6 percent compared to the November prediction of 2.1 percent growth.
The Bank sees growth continuing at reduced figures in South Asia, the Middle East and North Africa, and Sub-Saharan Africa.
East Asian developing countries are forecast to grow 5.3 percent overall, with China growing 6.5 percent. Some smaller economies will face recession however, with the Thai economy shrinking by 2 percent.
(China.org.cn by John Sexton, March 31, 2009)
