WB president Zoellick projects bleaker than expected economic prospects for 2009

12 June 2009

Speaking before a weekend meeting of finance ministers from the Group of Eight in Italy, World Bank President Robert Zoellick, said the global economy will contract even more sharply than expected in 2009. He said indications were that the world economy would shrink by nearly 3 per cent which was more than the estimate of 1.75 per cent made in March.

According to Zoellick he believed that some aspects of recovery would be evident in 2009 and 2010, but from a policy perspective that was not the core question as there is a large degree of uncertainty.

He added that previous recoveries in developed economies had been quick but there were concerns this time as the process would be slow because of very low capacity utilization and questions about sources of demand.

The global recession, set off by the collapse of the US housing market, has triggered soaring unemployment as companies have moved to respond aggressively to the slump in demand.

He added that even with the projected recovery in 2010, most developing countries would continue to be hit by aftershocks with increasingly dismal prospects until 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 said. "There is a big price to pay if you don't support these countries."