India And China Lead The Way

According to the World Bank, the economies of developing countries are expected to grow by just 1.2% this year. This is compared to last year’s 5.9% and 8.1% in 2007.

If India and China are excluded from these figures, the gross domestic product in developing countries is predicted to fall by 1.6%.

The Banks annual Global Development Finance report also warns of the possibility of joblessness and poverty in developing nations along with the fact that the global economy as a whole could shrink by 2.9% this year, compared to earlier predictions of 3%.

The Bank report warns that the economic policies have to focus on the financial sector reformation and support the poorest countries as well as warning that the amount of money flowing into the world’s poorest countries is likely to halve this year.

Figures from the World Bank show that developing countries’ net private capital inflow has fallen from $1.2 trillion to £707 billion in just a year.

Will The Rich Aid The Poor?

The Bank also predicts that the private capital inflow for the worlds’ poorest countries could be as little as $363 billion this year.

The Bank is asking the richest economies in the world to help boost the flow of credit into the poorest nations in order to help speed up the economic recovery.

“Developing countries can become a key driving force in the recovery, assuming their domestic investments rebound with international support, including a resumption in the flow of international credit,” said the chief economist at the World Bank, Justin Lin.

The institution also warned that the weakness in the developing countries after recent years of growth could also heighten the risk of social unrest.

But despite the negative outlook for the year, the Bank says that the growth in developing countries could reach 4.4% in 2010 and 5.7% by 2011. Primarily this will be down to India and Chinas’ contributions.

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