The World Bank Wednesday predicted a 2.7-percent global economic growth this year and warned a possible slow recovery as well as remaining crisis-triggered hardships.
According to the Global Economic Prospects 2010, a report released by the World Bank, the global economy is expected to grow 3.2 percent in 2011, compared with the 2.2 percent contraction in 2009.
NEW ENGINE FOR WORLD ECONOMY
The World Bank said "relatively robust" developing countries served as the key engine that led the recovery of the world economy.
Gross domestic product (GDP) -- a widely accepted measure of overall economy -- of the developing countries is displaying a relatively robust recovery and will be up by 5.2 percent this year and 5.8 percent in 2011.
The World Bank anticipates in its report China's growth in 2010 and 2011 both by 9 percent, the highest level among the world's major economies.
South Asia will post a 6.9-percent expansion in 2010, including a 7.5-percent and 8-percent rise in India in 2009 and 2010 respectively.
Growth will be more moderate this year in Sub-Saharan Africa (3.8 percent), in Latin America (3.1 percent) and in eastern and central Europe and Central Asia (2.7 percent).
Prospects in rich countries, which declined by 3.3 percent in 2009, are expected to increase, though at a much less quick speed -- by 1.8 and 2.3 percent in 2010 and 2011.
The United States, the world's largest economy and the epicenter of the financial crisis that triggered the downturn, will see a 2.5-percent growth in 2010 and 2.7 percent in 2011, with a projected contraction of 2.5 percent in 2009.
World trade volumes, which fell by a staggering 14.4 percent in 2009, are predicted to expand by 4.3 and 6.2 percent this year and in 2011, said the World Bank.
FRAGILE GROWTH
The report warned that while the worst part of the financial crisis might be over, the global recovery was still fragile.
"The global economic recovery that is now underway will slow down later this year as the impact of fiscal stimulus wanes. Financial markets remain troubled and private sector demand lags amid high unemployment," said the report.
"Overall, these are challenging times," said Justin Lin, chief economist and senior vice president of the World Bank.
"The depth of the recession means that even though growth has returned, countries and individuals will continue to feel the pain of the crisis for years to come," he said.
The World Bank predicted that the fallout from the crisis would change the landscape for finance and growth over the next 10 years.
Hans Timmer, an author of the report, said data indicated that unemployment would only get worse.
"Actually growth this year is not even strong enough to generate the jobs for the new people that are coming on the global job markets, let alone that you need to create employment for people who have lost their jobs in 2009," Timmer said at a news briefing.
UNCERTAINTY CONTINUES
The World Bank said that considerable uncertainty continued to cloud the global economic outlook. Depending on consumer and business confidence in the next few quarters and the timing of fiscal and monetary stimulus withdrawal, growth in 2011 could be as low as 2.5 percent and as high as 3.4 percent.
The report warned that, despite the return to growth, it would take several years before economies recoup the losses already endured. It estimated that about 64 million more people would be living in extreme poverty (on less than 1.25 U.S. dollars a day) in 2010 than would have been the case had the crisis not occurred.
Further, in the next five to 10 years, increased risk aversion, a more prudent regulatory stance, and the need to curb some of the riskier lending practices during the boom period that preceded the crisis can be expected to result in scarcer, more expensive capital for developing countries.
"As international financial conditions tighten, firms in developing countries will face higher borrowing costs, lower levels of credit, and reduced international capital flows. As a result, over the next five to seven years, trend growth rates in developing countries may be 0.2 to 0.7 percent lower than they would have been had finance remained as abundant and inexpensive as in the boom period," said Andrew Burns, another author of the report.
"Policy can help mitigate the worst symptoms of this crisis," said Justin Lin. "However, there are no silver bullets and achieving higher growth rates will require concerted efforts to increase domestic productivity and lower the domestic cost of finance."./.