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Developing countries’ GDP to slow: World Bank
The World Bank estimated economic growth in developing countries of 1.2 percent this year, and said that without China and India, output would shrink 1.6 percent.
Amid global 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 gross domestic product (GDP) figure Tuesday, to a 2.9 percent decline.
It also warned that a flight of capital from developing nations will swell the ranks of the poor and the unemployed.
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.
The bank expected Vietnam’s GDP growth to decrease to 3.5 percent this year, down from 6.2 percent last year and the March forecast of 5.5 percent.
In 2010, global growth was projected at 2 percent, and that of the developing countries at 4.4 percent, according to the bank. Excluding China and India, the developing countries would grow 2.5 percent.
China’s economy was forecast to expand 7.2 percent in 2009 and 7.7 percent in 2010, while India’s forecast was for 5.1 percent followed by 8 percent.
The bank is more pessimistic than its sister organization, the International Monetary Fund (IMF). The IMF, which is forecasting a global contraction of only 1.3 percent this year and growth of 2.4 percent in 2010, said June 19 that it plans to revise estimates “modestly upward.”
The lender’s view also contrasts with that of billionaire hedge fund manager George Soros, who on June 20 told Polish television that the worst of the global financial crisis “is behind us.”
‘Grave’ prospects
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 Monday 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 $707 billion in 2008, after a record $1.2 trillion in 2007.
Reduced capital inflows from exports, remittances and foreign direct investment means “increasingly grave economic prospects” for developing nations, the lender said.
Reduced aid from advanced economies because of the economic crisis will also likely weigh on their finances, the bank said.
As a result, the report forecast Vietnam’s current account deficit could worsen to 14.9 percent of GDP this year from 11.4 percent last year, before improving slightly to 14.5 percent in 2010.
The development lender also projected a 9.7 percent decline in global trade volume this year, before a 3.8 percent growth rebound in 2010.
“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,” Justin Lin, World Bank chief economist, said in a statement.
The bank called for “special attention” to “the risk of balanceof-payments crises and corporate debt restructurings in many countries,” in order to “avoid another debt crisis as seen in the 1970s and 1980s.”
That was particularly the case in the 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 in 2010.
The relative economic weakness in the developing countries after recent years of robust growth heightens the risks of social unrest and deepening poverty, the 185- nation institution said.
thanhnien, AFP
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