The global economy is poised to grow 2.7 per cent this year, but the recovery will be slow as the impact of fiscal stimulus wanes, the World Bank has said in a report.
The global economy is poised to grow 2.7 per cent this year, but the recovery will be slow as the impact of fiscal stimulus wanes, the World Bank has said in a report.
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The Global Economic Prospects 2010 report released on Wednesday said the recovery "that is now underway will slow later this year as the impact of fiscal stimulus wanes."
It said the global economy shrunk 2.2 per cent in 2009.
Financial markets remain troubled and private sector demand lags amid high unemployment. However, the economy is expected to grow 3.2 per cent in 2011, Xinhua reported.
"Overall, these are challenging times," said Justin Lin, World Bank chief economist and senior vice president.
"The depth of the recession means that even though growth has returned, countries and individuals will continue to feel the pain of the crisis for years to come," he said.
The report warns that while the worst of the financial crisis may be over, the global recovery is fragile. It predicts that the fallout from the crisis will change the landscape for finance and growth over the next 10 years.
Gross domestic product (GDP) - the wide measure of overall economy - for developing countries are for a relatively robust recovery, growing 5.2 per cent this year and 5.8 per cent in 2011 - up from 1.2 per cent in 2009.
The World Bank predicts China's economy to grow by nine per cent in 2010 and 2011.
Prospects in rich countries, which declined by 3.3 per cent in 2009, is expected to increase much less quickly - by 1.8 and 2.3 per cent in 2010 and 2011.
The US, world's biggest economy and the epicentre of the financial crisis that triggered the downturn, would see 2.5 per cent growth in 2010 and 2.7 per cent in 2011. The World Bank projected the US economy to shrink 2.5 per cent in 2009.
World trade volumes, which fell by a staggering 14.4 per cent in 2009, are projected to expand by 4.3 and 6.2 per cent this year and in 2011, said the World Bank.
While this is the most likely scenario, considerable uncertainty continues to cloud the outlook. Depending on consumer and business confidence in the next few quarters and the timing of fiscal and monetary stimulus withdrawal, growth in 2011 could be as low as 2.5 per cent and as high as 3.4 per cent.
"Unfortunately, we cannot expect an overnight recovery from this deep and painful crisis, because it will take many years for economies and jobs to be rebuilt. The toll on the poor will be very real," said Lin, the World Bank's chief economist.
"The poorest countries, those that rely on grants or subsidised lending, may require an additional $35-50 billion in funding just to sustain pre-crisis social programmes," he said.
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