World Bank: World economy to shrink in '09

March 8, 2009 at 9:33 PM
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WASHINGTON, March 8 (UPI) -- The global economy and international trade will shrink in 2009 for the first time since World War II, World Bank officials in Washington said Sunday.

In a report prepared in advance of next week's meeting in London of the G20 nations, the World Bank said the global financial crisis -- touched off by a wave of mortgage failures in the United States -- was affecting poor nations that had no involvement in the downturn's origin, The New York Times reported. Latin American, African and European nations are dealing with stunted economic growth as well as limited availability of credit, the report said.

The World Bank report did not include specific projections but bank officials said its staff would publish specific forecasts in coming weeks. The assessment is in sharp contract to other forecasts -- including some that the Times characterized as extremely pessimistic -- that the global economy would manage slight growth in 2009, with growth occurring outside the United States and Europe.

The World Bank report said the crisis is likely to exceed the ability of international institutions -- including the World Bank and the International Monetary Fund -- to cope with the economic disruption ahead.

World Bank President Robert Zoellick said in a statement the global crisis "needs a global solution and preventing an economic catastrophe in developing countries is important for global efforts to overcome this crisis."

"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.

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