WORLD BANK: The recession will be deeper then anticipated

Alina Vasiescu

In its latest report, the World Bank (BM) warns that the global recession this year will be deeper than the estimates made in March. According to the document published yesterday, the world economy will drop 2.9% this year, instead of the previously announced 1.7%. For next year, the institution predicts a growth of 2%, over the previously estimated 2.3%.

World Bank Experts warned that even though the recovery could begin this year, this would most likely be the case just for richer countries. The World Bank expressed its concern over the shrinking flows of private capital towards developing countries, which could drop to USD 363 billion, in 2009, down from USD 707 billion in 2008, and the record USD 1,200 billion in 2007.

"Unemployment is rising, and poverty is increasing in developing countries, leading to a significant deterioration of the living standard", the World Bank report indicates.

The estimates of the World Bank are gloomier than those of the IMF, which expects a 1.3% decline of the world economy in 2009.

The World Bank revised its estimates for the US economy downwards: a 3% drop in 2009, over the previous 2.4% estimate in March 2009. For the world"s second largest economy, Japan, The World Bank estimates a 6.8% decline, over the 5.3% estimate of the previous report, while the prediction for the Eurozone was revised to -4.5% this year, over the previous -2.7%.

The World Bank expects a 1.2% growth in developing countries, but if China and India are not considered, the economies of global countries are expected to drop 1.6%. The previous forecast estimated a 2.1% growth.

Yesterday"s report, also refers to a 9.7% drop in world trade for 2009, compared to the previous estimated drop of 6.1%.