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Developing world to see 1.2% GDP growth this year

The World Bank yesterday estimated economic growth in developing countries at 1.2 percent this year and said that without China and India, output would have shrunk 1.6 percent.

Amid the worst global financial and economic crisis in seven decades, the multilateral institution eight days ago lowered its outlook on global growth to a contraction of 3 percent this year.

It slightly revised the global GDP figure to a 2.9 percent decline.

The development lender’s preceding forecast, published in late March, put developing countries’ annual growth at 2.1 percent, and at zero if China and India were excluded.

Next year, global growth was projected at 2 percent and that of the developing countries at 4.4 percent, the bank said. Excluding China and India, the developing countries would grow 2.5 percent.

China’s economy was forecast to expand 7.2 percent this year and 7.7 percent next year, while India’s forecast was for 5.1 percent followed by 8 percent.

The latest World Bank forecasts on GDP — a measure of goods and services output in a country — came in a report Global Development Finance 2009: Charting a Global Recovery, published to coincide with a three-day Annual Bank Conference on Development Economics opening yesterday in Seoul.

The World Bank expressed concern about the thinning flow of private capital into developing countries, which has fallen nearly by half this year — 49 percent — to US$363 billion, compared with US$707 billion last year, after a record US$1.2 trillion in 2007.

The development lender also projected a 9.7 percent decline in global trade volume this year, before a 3.8 percent growth rebound next year.

“The need to restructure the banking system, combined with emerging limits to expansionary policies in high-income countries, will prevent a global rebound from gaining traction,” World Bank chief economist Justin Lin (林毅夫) said in a statement.

The anti-poverty bank called for “special attention” to “the risk of balance-of-payments crises and corporate debt restructurings in many countries” to “avoid another debt crisis as seen in the 1970s and 1980s.”

That was particularly the case in hard-hit developing countries in Europe and Central Asia, where GDP was projected to fall 4.7 percent this year, before a slight recovery to 1.6 percent growth next year.The World Bank yesterday estimated economic growth in developing countries at 1.2 percent this year and said that without China and India, output would have shrunk 1.6 percent.

Amid the worst global financial and economic crisis in seven decades, the multilateral institution eight days ago lowered its outlook on global growth to a contraction of 3 percent this year.

It slightly revised the global GDP figure to a 2.9 percent decline.

The development lender’s preceding forecast, published in late March, put developing countries’ annual growth at 2.1 percent, and at zero if China and India were excluded.

Next year, global growth was projected at 2 percent and that of the developing countries at 4.4 percent, the bank said. Excluding China and India, the developing countries would grow 2.5 percent.

China’s economy was forecast to expand 7.2 percent this year and 7.7 percent next year, while India’s forecast was for 5.1 percent followed by 8 percent.

The latest World Bank forecasts on GDP — a measure of goods and services output in a country — came in a report Global Development Finance 2009: Charting a Global Recovery, published to coincide with a three-day Annual Bank Conference on Development Economics opening yesterday in Seoul.

The World Bank expressed concern about the thinning flow of private capital into developing countries, which has fallen nearly by half this year — 49 percent — to US$363 billion, compared with US$707 billion last year, after a record US$1.2 trillion in 2007.

The development lender also projected a 9.7 percent decline in global trade volume this year, before a 3.8 percent growth rebound next year.

“The need to restructure the banking system, combined with emerging limits to expansionary policies in high-income countries, will prevent a global rebound from gaining traction,” World Bank chief economist Justin Lin (林毅夫) said in a statement.

The anti-poverty bank called for “special attention” to “the risk of balance-of-payments crises and corporate debt restructurings in many countries” to “avoid another debt crisis as seen in the 1970s and 1980s.”

That was particularly the case in hard-hit developing countries in Europe and Central Asia, where GDP was projected to fall 4.7 percent this year, before a slight recovery to 1.6 percent growth next year.
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