India, China growth to cushion deepening recession: World Bank

June 22nd, 2009 - 7:49 pm ICT by IANS  

By Arun Kumar
Washington, June 22 (IANS) Warning that the world is entering an era of slower growth, the World Bank Monday said that without India and China, the developing countries’ output would shrink 1.6 percent.

But with the two Asian engines of growth included, developing countries are expected to grow by only 1.2 percent this year, after 8.1 percent growth in 2007 and 5.9 percent growth in 2008.

India’s economy was forecast to expand 5.1 percent in 2009 and by 8.0 percent in 2010, while China’s forecast was for 7.2 percent followed 7.7 percent, according to the Global Development Finance 2009 report released Monday.

The latest World Bank forecasts on gross domestic product (GDP) were published to coincide with a three-day Annual Bank Conference on Development Economics that opened Monday in Seoul.

“When China and India are excluded, GDP in the remaining developing countries is projected to fall by 1.6 percent, causing continued job losses and throwing more people into poverty,” the Bank said.

“Global growth is also expected to be negative, with an expected 2.9 percent contraction of global GDP in 2009,” it said, warning that with the world entering an era of slower growth, a tighter and more effective oversight of the financial system would be required.

Global GDP growth is expected to rebound to 2 percent in 2010 and 3.2 percent by 2011.

In developing countries, growth is expected to be higher, at 4.4 percent in 2010 and 5.7 percent in 2011, albeit subdued relative to the robust performance prior to the current crisis.

Amid the worst global financial and economic crisis in seven decades, the multilateral institution eight days ago lowered its outlook on global growth, to a contraction of 3.0 percent this year.

The development lender’s preceding forecast, published in late March, put developing countries’ annual growth at 2.1 percent, and at zero if China and India were excluded.

“The global recession has deepened,” said the report warning that economic damage to developing countries “has been much deeper and broader than previous crises”.

“Unemployment is on the rise, and poverty is set to increase in developing economies,” it said.

(Arun Kumar can be contacted at arun.kumar@ians.in)

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