Low income nations about to feel pinch warns World Bank

The global economic crisis is about to hit the poorest populations in the world warns the World Bank. They are estimating that about 129 developing nations will be dealing with shortfalls of $270 billion and $700 billion this year alone.
Thus far the poorest countries have dealt with the economic crisis better than the wealthiest ones. That is about to change comes a new warning. The World Bank believes that global growth in 2009 will be negative for the first time since the Second World War.

The World Bank is not the only one with this warning. The Institute of International Finance (IIF) warned of cut-off capital flows to the rising markets this year.

Xinhuanet.com reports:

“Channeling infrastructure investment to the developing world where it can release bottlenecks to growth and quickly restore demand can have an even bigger bang for the buck and should be a key element to recovery,” Justin Yifu Lin, World Bank chief economist and senior vice president said.

The World Bank says that 46 million people will be thrown into poverty as the global economic crisis begins to hit the third world sector. The warning came from WB president Robert Zoellick that ”social and political unrest” will cost some developing nations a shortage of $US270-$700 billion.

Canberra Times reports:

”This global crisis needs a global solution and preventing an economic catastrophe in developing countries is important for global efforts to overcome this crisis,” Robert Zoellick said. ”We need investments in safety nets, infrastructure, and small and medium size companies to create jobs.”

In just one year export trade has been halved in some nations because of the crisis. Japan has been especially hard hit by reduced trade.

Business Daily Africa reports:

“The slowdown in growth will likely deepen the degree of deprivation of the existing poor,” notes the World Bank in a statement released on Friday. “In many low income countries, large numbers of people are clustered just above the poverty line and are therefore particularly vulnerable to economic volatility and temporary slowdowns.”

With the higher food prices, reduced donor assistance and a fall in foreign direct investments and cash remittances from the developed countries the immediate future does not fare well for low income countries.

“When this crisis began people in developing countries, especially those in Africa, were the innocent bystanders yet they have no choice but to bear its harsh consequences,” said World Bank managing director, Ngozi Okonjo-Iweala.

Bloomberg News has predicted that East Asia would be hardest hit by falling global commerce.

Radio Australia reports:

The most concern is for the poor in Africa but Asia is not immune. This latest report comes on top of one in February saying 53 million more people could be trapped in poverty as a result of the global slowdown. The examples are mounting…more than half a million jobs were lost in India in the last three months of 2008. Cambodia has lost 30,000 jobs in the garment industry, its only significant export.

The international community will have to make a tremendous effort to reduce poverty. The wealthiest nations will be forced to shoulder heavy responsibilities to reduce the impact of the shrinking dollar and the costs of aid to those that are in most need.


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