WASHINGTON, March 9 (UPI) -- The ripple effects of a burst U.S. housing bubble will traverse the globe in 2009, economists at the World Bank said.
Countries from Africa to Latin America to Asia will find credit shrinking and export markets in decline, a World Bank report said, The New York Times reported Monday.
As a result, for the first time in fifty years, both the global production and worldwide trade volume would shrink in the same year.
"This global crisis needs a global solution," said Robert Zoellick, president of the world bank, who asked other countries to contribute to a "vulnerability fund," to help the neediest countries weather the storm.
"We need investments in safety nets, infrastructure, and small and medium-size companies to create jobs and to avoid social and political unrest," Zoellick said.
In general, economies in Europe have been hurt by huge bank losses in U.S. mortgage-backed securities that has severely choked off credit to companies. The U.S. recession, meanwhile, has undermined their wealthiest export market.
Asian countries, in turn, have seen their exports markets in the United States and then Europe pulling back.
The Word Bank has asked that wealthier countries set aside 0.7 percent of any economic stimulus package to help the world's poorer countries.
If the World Bank tripled its lending in 2009 to $35 billion, that would be only a fraction of what is needed, Zoellick said.