First time since World War II :

Global economy to shrink in 2009

US: The World Bank said on Sunday that the global economy will shrink in 2009 for the first time since World War Two and estimated developing countries face a financing shortfall of 270-700 billion dollars this year.

In a paper for next Saturday’s meeting of the Group of 20 finance ministers and central bank governors, the World Bank said that the sharp global contraction is affecting both advanced and developing countries.

“Global GDP will decline this year for the first time since World War II, with growth at least 5 percentage points below potential,” said the report.

World Bank also said that global industrial production by the middle of 2009 could be as much as 15 percent lower than levels in 2008.

World trade is on track in 2009 to record its largest decline in 80 years, with the sharpest losses in East Asia. It also warned that international financial institutions cannot by themselves currently cover the 270-700 billion dollar shortfall for these 129 developing countries.

The World Bank noted that only one quarter of vulnerable developing countries have the ability to finance measures to blunt the economic downturn, such as job-creation or safety net programs.

“Clearly, fiscal resources do have to be injected in rich countries that are at the epicenter of the crisis, but channeling infrastructure investment to the developing world where it can release bottlenecks to growth and quickly restore demand can have an even bigger bang for the buck and should be a key element to recovery,” Lin said.

Washington, Monday, Xinhua