Bridges Weekly Trade News Digest • Volume 13 • Number 9 • 11th March 2009
World Bank Predicts Steepest Drop in Trade in 80 Years
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World trade is set to register its first drop since 1982 and its biggest decline in 80 years, the World Bank said in a report released this week.
Thus far, some of the sectors that have been most affected include urban-based exporters, construction, mining and manufacturing. The sharpest losses are expected to be felt in East Asia.
The crisis will have significant and long-lasting implications in poorer parts of the world. Indeed, developing countries face a ‘financing gap’ of between US$ 270 billion and US$ 700 billion, the World Bank said, stressing that levels of funding that have been pledged by international financial institutions would not be able to meet poor countries’ needs this year. If the ongoing economic crisis meets some of the more pessimistic predictions, “unmet financing needs will be enormous.”
Such an outcome could have long-term implications for developing countries. The economic slowdown is likely to push people who are hovering on the brink of poverty into a more serious degree of deprivation, the report warned, and developing countries will struggle to cope with the increased numbers of their citizens who need government support.
Out of the world’s 116 developing countries, 94 have experienced a slowdown in economic growth.
“Preventing an economic catastrophe in developing countries is important for global efforts to overcome this crisis. We need investments in safety nets, infrastructure, and small and medium size companies to create jobs and to avoid social and political unrest,” World Bank President Robert Zoellick said upon the release of the report.
The analysis was drawn up for a meeting of finance ministers from the Group of 20 world economic powers to be held on Saturday.
In similarly gloomy economic news, the head of the International Monetary Fund yesterday told a group of African leaders in Dar Es Salaam that they should brace themselves for what will likely be the worst year for the economy since 1945.
“The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes,” IMF chief Dominique Strauss-Kahn said on Tuesday. “Continuing deleveraging by world financial institutions, combined with the collapse in consumer and business confidence is depressing domestic demand across the world.”
ICTSD reporting; “IMF: World economy to shrink for first time in 60 years in ‘great recession’,” THE GUARDIAN, 10 March 2009.
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