The World Bank has cut its 2009 global growth forecast, saying the world economy will shrink by 2.9%. Global trade is expected to plunge by 9.7% this year, it said, while total gross domestic product for high-income countries contracts by 4.2%. It also said that economic growth in developing countries should slow to 1.2%— but excluding China and India, developing economies will contract by 1.6%.
The global economy should start to grow again in late 2009, the group said, but "the expected recovery is projected to be much less vigorous than normal," the report said. It said banks' ability to finance investment and consumer spending would be hampered by the overhang of unpaid loans and devalued assets.
Eastern Europe and Central Asia have been hit hardest and the region's gross domestic product is expected to fall by 4.7% this year, the bank said. It said growth should recover next year to 1.6%.
GDP in Latin America and the Caribbean should fall by 2.3% this year before rebounding to expand by 2% in 2010, the report said.
In the Middle East and North Africa, growth is expected to fall by half this year to 3.1%, while sub-Saharan Africa will drop to 1%. East Asia should post a 5% expansion, the bank said.
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