World Bank, UN forecast sluggish recovery in 2010

World Bank, UN forecast sluggish recovery in 2010

World Bank, UN forecast sluggish recovery in 2010

Both organisations estimated that the world economy shrank by 2.2 per cent in 2009, the worst slump in generations, brought on by a financial crisis that spread from Wall Street to the entire globe in late 2008.

The World Bank predicted the global economy will grow 2.7 per cent in 2010 and 3.2 per cent in 2011. Developing countries will lead the way out of the recession with 5.2 per cent growth in 2010 and 5.8 per cent the following year.

Wealthier nations, by contrast, are continuing to suffer some effects from the massive financial crisis. Many advanced economies are still suffering from high unemployment and are likely to grow on average just 1.8 per cent in 2010 and 2.3 per cent in 2011.

The UN offered slightly more pessimistic numbers, predicting the global economy will climb 2.4 per cent in 2010. Wealthy nations will grow 1.3 per cent and developing economies 5.3 per cent in 2010.

"Unfortunately, we cannot expect an overnight recovery from this deep and painful crisis, because it will take many years for economies and jobs to be rebuilt," said Justin Lin, the World Bank's chief economist.

The UN warned of a "double-dip recession" if governments are too quick about withdrawing public spending measures that have helped to revive their economies over the last year.

Lin said the world's poorest countries may need between $35 billion and $50 billion this year to keep social services going at the same rate as before the recession struck. The World Bank said it expected 64 million more people to be pushed into extreme poverty, defined as living on less than $1.25 per day, in 2010.