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The world economy is on track to post its worst performance since the Great Depression, with developing countries bearing much of the economic pain, the World Bank said Monday.
Those countries face a credit shortfall of up to $700 billion, the bank said.
“The global economy is likely to shrink this year for the first time since World War II,” the bank said, noting that global industrial production, by the middle of 2009, could be as much as 15% lower than in 2008.
Based on those projections, world trade is on track to record its largest decline in 80 years, with the sharpest losses expected in East Asia.
The World Bank, which helps finance the debt of developing nations, says the financial crisis will have long-term implications for them.
“Many institutions that have provided financial intermediation for developing country clients have virtually disappeared. Developing countries that can still access financial markets face higher borrowing costs, and lower capital flows, leading to weaker investment and slower growth in the future,” the bank said.
“When this crisis began, people in developing countries, especially those in Africa, were the innocent bystanders in this crisis, yet they have no choice but to bear its harsh consequences,” World Bank Managing Director Ngozi Okonjo-Iweala said in remarks prepared for a development conference in London on Monday.
