World Bank President Robert Zoellick said 2009 will be a “dangerous year” as the global economy wrestles with its first recession in more than 60 years.
The World Bank expects the world economy to shrink between 1 percent and 2 percent this year, Zoellick said on Saturday at the Brussels Forum on global geopolitical problems.
“We haven't seen a figure like that globally since World War II, which really means since the Great Depression,” he said. Global trade is set to slide the most in 80 years, with East Asia the hardest-hit region, as demand dries up. The World Bank has forecast a 2.1 percent decline in global export volumes this year, the first drop since 1982.
“2009 is going to be a very dangerous year,” Zoellick said. “It is indeed serious, and there are issues that go beyond the economic to political and social stability.”
This remark comes only a few weeks after the World Bank stated that developing countries could face a financing gap of $270-$700 billion to help deal with the effects of the global crisis.
Also the International Monetary Fund said developing countries would need $25 billion, and possibly as much as $140 billion, in 2009 to meet their financing needs.
The World Bank said the crisis threatened long-lasting repercussions for developing countries, struggling to find markets for goods as world trade volumes suffer their first annual decline since 1982, while remittances from overseas workers slow, and falling commodity prices provide less revenue for governments.
“The challenge facing developing countries is how, with fewer resources, to pursue policies that can protect or expand critical expenditures, including on social safety nets, human development and critical infrastructure,” the World Bank said.