World Bank Group President Robert B. Zoellick says the global economy is set to contract this year by more than previously estimated, and poor countries will continue to be hit hard by multiple waves of economic stress.
The World Bank has downgraded its 2009 global growth forecast, to negative 3 percent from a 1.7 percent contraction.
"Although growth is expected to revive during the course of 2010, the pace of the recovery is uncertain and the poor in many developing countries will continue to be buffeted by the aftershocks," Zoellick told a recent meeting of finance ministers of G8 countries.
Even with the stabilization of financial markets in many developed economies, unemployment and under-utilization of capacity continue to rise, putting downward pressure on the global economy, Zoellick says.
He notes that while developed economies have previously recovered rapidly from downturns this time around recovery would be slow because of very low capacity utilization and questions about sources of demand.
And even if growth resumes in 2010, Zoellick says most developing countries would continue to be buffeted by the aftershocks and face increasingly bleak prospects unless the drop in their exports, remittances and foreign direct investment was reversed by the end of 2010.
"There is much more we need to do in the coming months to mobilize resources to ensure that the poor do not pay for a crisis that is not of their making," Zoellick observes.
"There is a big price to pay if you don't support these countries."
Still, some economists say the worst is over for the global economy, at least in Asian markets.
"We now have hard data that China's manufacturing sector is stabilizing, and with its fiscal stimulus spending on infrastructure, that's painting a picture that better demand conditions are ahead for Asia,” economist Richard Felson told DailyFinance.
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