Washington, June 22: The World Bank on Monday 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 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 3.0% this year.
It slightly revised the global gross domestic product (GDP) figure on Monday, to a 2.9% 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.
In 2010, global growth was projected at 2.0 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 8.0 percent.
The latest World Bank forecasts on gross domestic product (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 363 billion dollars compared with 707 billion in 2008, after a record 1.2 trillion in 2007.
The development lender also projected a 9.7 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 anti-poverty bank called for “special attention” to “the risk of balance-of-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.
A similar pattern of decline and rebound was seen for Latin America and the Caribbean, where a 2.2 percent GDP contraction in 2009 would be followed by a 2.0 percent expansion the next year.
Other regions of the developing world continued to show growth but no contraction. In East Asia and Pacific, GDP was expected to rise 5.0 percent in 2009 and 6.6 percent in 2010, while South Asia would expand 4.6 percent, followed by 7.0 percent.
GDP in the Middle East and North Africa was expected to rise 3.1 percent in 2009 and 3.8 percent in 2010.
Sub-Saharan Africa would expand 1.0 percent, then accelerate to a 3.7 percent pace next year.
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.
–Agencies