Opinion - Editorials   

A call for global action

In its latest Global Development Finance (GDF) report, the World Bank sees difficult days ahead for the global economy. The prediction has dealt a blow to the slowly improving sentiment worldwide and stock markets around the globe have declined sharply in its wake. According to the Bank, in nearly all parameters, the global economy is set to decline during 2009. Global output would be lower by 2.9 per cent and the world trade by as much as 10 per cent. Private capital flows will drop sharply from $707 billion in 2008 to $363 billion this year. Some of these forecasts are gloomier than the Bank’s earlier projections as well as those made by other global institutions such as the IMF and the WTO. In March, the World Bank had projected a 1.7 per cent decline in world output. The IMF, which had, to begin with, predicted a lesser contraction of 1.3 per cent, is likely to announce a slight improvement in the world economy. The WTO had predicted a 9 per cent fall in world trade due to the collapsing demand and a curtailment of trade finance. The World Bank expects the recessionary factors to worsen: there is a shortage of capital and great uncertainty over future demand. There has been a sharp fall in the production of manufactured goods and in the global trade in manufactures. The level of industrial production is down by 15 per cent since August 2008 in the developed countries and by 10 per cent in the developing countries, excluding China.

While lowering its 2009 forecasts for most countries, the World Bank endorses the findings of the other global institutions and points out that the developing countries will fare better than the rich countries. However, even these countries will slow down sharply, the growth rate slipping from 5.9 per cent in 2008 to 1.2 per cent in 2009. In contrast, the collective GDP of industrial countries is expected to fall by 4.9 percentage points in 2009. The Bank makes the interesting point that much of the growth in the developing world is coming from India and China. If these two are excluded, the developing countries too would post negative growth. India’s growth rate will be at 5.1 per cent in 2009, which is one percentage point below the rate for 2008. While generally acknowledging the positive measures undertaken by several governments to combat the crisis, the Bank wants concerted global action. Its report is an eye-opener, and the poor countries that are already under strain and have borne the brunt of the food and fuel crises should receive attention quickly. International aid commitments to them must be upheld and strengthened further in these difficult times.

Printer friendly page  
Send this article to Friends by E-Mail

Stories in this Section

Monsoon prospects
A call for global action
Searching for water on the Moon
A writer as the conscience of Africa
Where a toxic site also provides livelihood
Asian Development Bank official clarifies
Importance of a woman’s name
Rebuilding of Buddha statue begins in Bamiyan
Corrections and clarifications
Unfortunate
Burqa row
Missing ‘E’s
Correcting history

Copyright © 2009, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu