Developing countries to grow, thanks to India, China

Developing countries to grow, thanks to India, China
The Times of India, June 23, 2009, Page 23

Washington: Boosted by the strength of India and China, developing nations would grow 1.2% this year, but without the two, these economies would shrink 1.6%, says the World Bank. Warning that the world is entering an era of ‘‘slower growth'', the multilateral lending agency has projected the global economy to shrink 2.9% this year.

The World Bank in its latest report titled ‘Global Development Finance 2009: Charting A Global Recovery' has said that excluding India and China, the developing economies would shrink 1.6% this year. ‘‘Developing countries are expected to grow by only 1.2% this year, after 8.1% growth in 2007 and 5.9% growth in 2008.

‘‘When China and India are excluded, GDP in the remaining developing countries is projected to fall by 1.6%, causing continued job losses and throwing more people into poverty,'' the report said.

The bank anticipates the global economy to contract 2.9% this year but to grow in 2010. Earlier, the bank projected the world GDP to shrink 1.7%. ‘‘Global growth is also expected to be negative, with an expected 2.9% contraction of global GDP in 2009,'' the report noted.

Presenting an optimistic outlook, the bank has projected the developing economies to grow at 4.4% and 5.7% in 2010 and 2011, respectively. ‘‘Global GDP growth is expected to rebound to 2% in 2010 and 3.2% by 2011. In developing countries growth is expected to be higher, at 4.4% in 2010 and 5.7% in 2011, albeit subdued relative to the robust performance prior to the current crisis,'' the report said. Battered by the global economic recession and shaky financial markets, the net private capital inflow to developing countries plunged to $707 billion in 2008 from $1.2 trillion in the previous year.

‘‘Amid global economic recession and financial-market fragility, net private capital inflows to developing countries fell to $707 billion in 2008, a sharp drop from a peak of $1.2 trillion in 2007. International capital flows are projected to fall further in 2009, to $363 billion,'' it noted. AGENCIES