JOIN US“The last two years have been a difficult one for the global economy. The economic crisis has severely affected economic growth in developing and developed countries. While recovery has begun in many developing countries, the shoots are still tender and the recovery uneven,” Chawla said in his address to the IMF-World Bank Spring meeting here.
Noting that the recovery can be easily upset by minor shocks and fluctuations, Chawla said most significantly, the altered financial landscape has adversely affected the growth potential of developing countries. “Costlier and more scarce finance would reduce annual growth rates by a few points. This is a permanent change in growth patterns. While the macro-effects of this need to be observed, it is certain that poverty reduction efforts and achievement of MDGs will see a setback,” Chawla said.
Observing that there is a perceptible increase in poverty as a result of the crisis which has had a disproportionate impact on poor households, he said most importantly, the long lasting effects of the crisis will be felt through delayed escape from poverty, higher infant mortality rates, lower school enrollments and poorer nutrition levels. “While developing countries are trying to battle the crisis, many need additional help to bridge resource gaps. The MDBs, particularly the World Bank Group, have an important role to play in meeting some of the financial needs of developing countries as they try to maintain essential social and development expenditures,” Chawla said. Further he said India believes that the days of depressed demand for Bank assistance are over. “The coming years would see sustained demand for Bank assistance - both in the public sector and the private sector - to fill financing gaps which have opened up.”
Chawla said there is an emergent need for integration of the rising developing countries into the multilateral system. “The world also needs to address the challenges posed by global issues such as climate change, the need to strengthen the global trade system, address inadequacies of the international financial architecture, and to respond to agriculture and food security needs,” he said.
Press Trust of India