World Bank Revises Down GEP for G20 Meet

The World Bank has issued a revision of its most recent Global Economic Prospects report in preparation for the G20 London Summit. I quote:

What began six months ago with a massive de-leveraging in financial markets has turned into one of the sharpest global economic contractions in modern history. As investors repatriated overseas assets and credit conditions were tightened, firms around the world had to scale-back production and postpone capital spending plans. Faced with unprecedented loss of wealth and rapidly weakening labor markets, consumers reined-in spending, especially for durable goods.
This update of the projections in the World Bank’s Global Economic Prospects report (GEP) of December 2008, reflects the rapid deterioration in financial and economic conditions—and the increasingly negative interaction between weakening economies and fragile financial systems—that have come to the fore since late 2008 for virtually every country in the world.

• Global GDP is expected to contract by 1.7 percent in 2009, which would be the first decline in world output on record (table 1.a and figures 1.a and 1.b). This marks a substantial 2.6 point deterioration from earlier GEP forecasts.
• High-income countries are in deep recession this year, with OECD economies likely to contract 3 percent and other high-income countries 2 percent.
• GDP among developing economies should ease from an advance of 5.8 in 2008 to 2.1 percent (contrasted with earlier projections for 4.4 percent growth). Two developing regions, Europe and Central Asia, and Latin America and the Caribbean will witness GDP decline in the year.
• Volumes of world trade in goods and services are expected to drop 6.1 percent in 2009, with a significantly sharper contraction in trade volumes of manufactured products.

Read the GEP 2009 Forcast Update.

Check out the London G20 Summit website.