WASHINGTON, Jan 21 – The global economy is poised to grow 2.7 percent this year after shrinking in 2009, the World Bank said Wednesday in a report highlighting risks to a "fragile" recovery.
The World Bank said the nascent recovery from the worst crisis since the Great Depression was "expected to slow later this year as the impact of fiscal stimulus wanes."
"Overall, these are challenging times," said Justin Lin, World Bank chief economist.
"The depth of the recession means that even though growth has returned, countries and individuals will continue to feel the pain of the crisis for years to come," he said.
Key impediments to growth are troubled financial markets and sluggish private sector demand amid high unemployment, the Washington-based development lender said in its "Global Economic Prospects 2010" report.
Overall, global gross domestic product (GDP) — a broad measure of the output of goods and services that fell by 2.2 percent last year — is expected to expand 2.7 percent in 2010 and 3.2 percent in 2011.
Growth would be led by developing countries, whose economies would have "relatively robust" growth of 5.2 percent this year and 5.8 percent in 2011, after managing to buck the global downturn with 1.2 percent growth last year.
China\’s massive economy would continue to be the primary engine, with growth at 9.0 percent this year and the next. South Asia would post a 6.9 percent expansion in 2010, including a 7.5 percent rise in India.
Growth would be more moderate this year in Sub-Saharan Africa (3.8 percent), in Latin America (3.1 percent) and in eastern and central Europe and Central Asia (2.7 percent).
Rich countries, impacted the most by the global financial crisis, would not recover so quickly.
Developed economies, which experienced a 3.3 percent plunge in GDP last year, were projected to grow 1.8 percent in 2010 and 2.3 percent in 2011.
The United States, the world\’s biggest economy and the epicenter of the financial crisis that triggered the downturn, would see 2.5 percent growth in 2010 and 2.7 percent in 2011.
Hans Timmer, an author of the report, said data indicates that unemployment will only get worse.
"Actually growth this year is not even strong enough to generate the jobs for the new people that are coming on the global jobs market, let alone that you need to create employment for the people who have lost their jobs in 2009," Timmer said at a news briefing.
The projected modest global expansion this year should mean a rebound in world trade volumes that plummeted 14.4 percent in 2009.
Trade volumes were projected to expand by 4.3 percent this year, and accelerate to 6.2 percent in 2011.
Oil prices were forecast to hold around 76 dollars a barrel in 2010 and 2011.
"The recovery is fragile and expected to slow in the second half of 2010 as the growth impact of fiscal and monetary measures wane and the current inventory cycle runs its course," said the poverty-fighting bank.
The World Bank underscored the uncertainties about the strength and durability of the recovery, saying it would depend on how much household- and business-sector demand firms over the next few quarters.
"Neither a double-dip scenario, where growth slows appreciably in 2011, or a strengthening recovery can be ruled out," said the report.
That assessment contradicted the view of the bank\’s sibling institution, the International Monetary Fund, whose managing director Dominique Strauss-Kahn repeatedly has dismissed a double-dip scenario.
Developing countries are suffering a high human cost because of the crisis, the bank said.
As many as 50,000 additional children may have died of malnutrition in 2009 and by the end of 2010, 90 million more people are expected to be living in poverty than would have been the case without the crisis.
The bank said an additional 35-50 billion dollars in funding would be needed just to maintain current levels of programming.
Lin warned there were "no silver bullets" to restore growth.
"Achieving higher growth rates will require concerted efforts to increase domestic productivity and lower the domestic cost of finance," the Chinese chief economist said.