World Bank: Global economy will shrink in 2009 for first time since WWII RAW STORY

Published: Sunday March 8, 2009





Print This Email This The economic crisis may have started in the United States, but it hasn't spared poorer countries around the world.



In a report released Sunday, the World Bank predicted that the global economy would shrink in 2009 for the first time since World War II. The assessment of what's in store for this year is more pessimistic than what most private forecasters have predicted.



Although the bank did not provide a specific estimate of the size of the downturn, bank officials said its its economists would be publishing one in the next several weeks, the New York Times reported.



Developing countries face a financial shortfall of $270 to 700 billion this year, the World Bank found, warning that international institutions alone cannot fill the gap.



The shortfall comes "as private sector creditors shun emerging markets, and only one quarter of the most vulnerable countries have the resources to prevent a rise in poverty," the Bank said in statement.



Published ahead of meetings for ministers of the G20 developing and industrialized nations to be held in London March 13 and 14, the study found that "international financial institutions cannot by themselves currently cover the shortfall" for the 129 developing countries.



"We need to react in real time to a growing crisis that is hurting people in developing countries," said World Bank Group president Robert Zoellick.



"This global crisis needs a global solution and preventing an economic catastrophe in developing countries is important for global efforts to overcome this crisis."



Zoellick, who in February called for a fund to which each developed country would contribute 0.7 percent of its stimulus package to help poorer countries, urged more investment in safety nets, infrastructure, and small and medium-sized companies.



With wire reports.





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