Washington/Seoul, June 22 (inditop.com) Most developing economies will slip into recession this year amid a global financial crisis that has prompted wealthy investors to pull their money out of projects for the poor, the World Bank warned Monday.
The developing world will grow 1.2 percent this year after growing 5.9 percent in 2008. Excluding China and India, which have held up relatively well in the ongoing recession, developing economies will shrink by 1.6 percent in 2009, the World Bank said.
Private investors are abandoning projects in poor countries in massive numbers, as they deal with their own problems in wealthy financial centres in New York, London, Frankfurt and elsewhere.
The World Bank, in an annual report on developing country financing, predicted that international capital flows will tumble to $363 billion this year, down from $707 billion in 2008 and a high of $1.2 trillion in 2007.
The financial crisis, which largely originated in the US, is considered the worst since the Great Depression of the 1930s. The global economy has fallen into its first recession since World War II.
Nearly two years after the crisis began, the World Bank report said “global financial markets remain unsettled, and prospects for capital flows to the developing world are dim”.
The World Bank called on wealthy countries to make more of an effort to not only stabilise their own financial sectors, but to help revive private investment to the world’s poorest.
“Developing countries can become a key driving force in the recovery, assuming their domestic investments rebound with international support, including a resumption in the flow of international credit,” said Justin Lin, the World Bank’s chief economist.
