Global recession could blow a $700bn hole in developing countries’ abilities to pay for imports and meet debt obligations, the World Bank is warning. With economic activity set to contract worldwide for the first time since World War II, trade forecast for fall at its fastest rate for 80 years, and industrial production set to decline by 15 per cent, emerging economies face major difficulties.
Robert Zoellick, the President of the World Bank, is calling for action from both governments and lenders to avoid social and political problems. “We need to react in real time to a growing crisis that is hurting people in developing countries,” Mr Zoellick said.
Rich countries’ demands are crowding their poorer counterparts out of straitened capital markets. Stimulus packages put in place in the developed world should include measures to boost spending in poorer economies, the Bank says.