The World Bank forecast record declines in 2009 global output and trade as the economic crisis bites, and warned a slowdown in the developing world is pushing millions into poverty.
The global economy is expected to shrink by 1.7 percent in 2009, "the first decline in world output since World War II,". The sharp contraction marks a dramatic 2.6 point downward revision from the 0.9 percent growth in 2009 forecast only last November.
The update "reflects the rapid deterioration in financial and economic conditions -- and the increasingly negative interaction between weakening economies and fragile financial systems -- that have come to the fore since late 2008 for virtually every country in the world," the 185-nation development lender said.
World Bank president Robert Zoellick said the recession was expected to trap 53 million more people in poverty this year, defined as subsistence living on less than 1.25 dollars a day.
"This comes after soaring food and fuel prices of recent years, which pushed 130 to 155 million people into extreme poverty, many of whom have still not recovered," Zoellick said in a speech in London.
Poor people in developing countries have little buffer to protect them against the effects of the crisis. "In London, Washington, and Paris people talk of bonuses or no bonuses. In parts of Africa, South Asia, and Latin America, the struggle is for food or no food," he said.
According to the latest GDP projections, high-income economies would shrink 2.9 percent this year, a notch more than the prior estimate of 2.8 percent.
The Washington-based bank projected trade volumes would drop a record 6.1 percent from 2008, led by a steep decline in manufactured goods trade.
A "modest" recovery in 2010 was possible but highly uncertain, the bank said."Continued banking problems or even new waves of tension in financial markets could lead to stagnation in global GDP or even to another year of decline in 2010."
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Reasons why most reports refers to this Global Crisis as being the worst since World War II, has much to do with, the last Great Depression started in 1929 and lasted into World War II. After WWII, economies went into a boom.
This global crisis may not develop into a Great Depression as communication and advance economical relationships of the world market have evolved in recent history, thus global efforts can help prevent the global economy from slipping into despair.
