Logo of Phnom Penh Post newspaper Phnom Penh Post - World Bank warning is bleak

World Bank warning is bleak

World Bank warning is bleak

THE World Bank has warned the global economy could return to the dark days of the 2008 crisis, with slowing growth and rising commodity prices.

After the recession in 2009 and the 2010 rebound, the multilateral institution said, 2011 is expected to be a year of deceleration.

In its latest projections, the bank estimates global growth of 3.3 percent this year following a 3.9 percent rate in 2010. The organisation’s estimate of Cambodia’s GDP growth last year remained steady at 4.9 percent, with a forecast of 6.0 percent and 6.5 percent for 2011 and 2012 respectively.

Cambodia’s 2010 inflows of remittance were estimated to have risen 7.7 percent last year to US$364 million, while tourist arrivals were estimated at 2.251 million – slightly below the Ministry of Tourism’s official figure of 2.509 million.

Emerging and developing countries were expected to expand 6.0 percent this year, down from a 7.0 percent pace in 2010, the bank said in its latest Global Economic Prospects report.

But that was more than double the 2.4 percent rate expected to be clocked by high-income countries this year, slowing from a 2.8 percent rate in 2010.

Growth in both high-income and developing countries, however, was expected to pick up toward mid-2011, and “settling at rates close to their longer-run potential.”

For 2012, growth in the global economy was seen rising at a 3.6 percent rate. High-income countries were expected to expand by 2.7 percent and developing countries would speed up just a notch, to 6.1 percent.

Still, the overall pace of growth was too weak to give the recovery solid traction, the World Bank said. “Unfortunately these growth rates are unlikely to be fast enough to eliminate unemployment and slack in the hardest-hit economies and economic sectors.”

In addition, “serious tensions and pitfalls persist in the global economy, which in the short run could derail the recovery to differing degrees,” it warned. Threats that could derail the recovery include the eurozone financial market crisis, volatile capital flows and the rising prices of commodities, including food and fuel, the 187-nation institution said.

The World Bank expressed particular concern about rising commodity prices, including food and fuel, driven by loose monetary policies in the developed countries and solid demand in the emerging economies.

“Although real food prices in most developing countries have not increased as much as those measured in United States dollars, they have risen sharply in some poor countries,” the World Bank said.

The 2008 scenario of soaring food and oil prices amid slowing growth, which had revived the word “stagflation”, would likely be avoided, the World Bank said. In 2008, a powerful surge in commodity prices was abruptly snuffed out by the bankruptcy of US investment bank Lehman Brothers in September.

Asked how conditions would be different this time, Hans Timmer, the bank’s director of development prospects, said he hoped that supplies would respond to demand.

“You have there still large stockpiles, which were not available in the crisis of 2008, but clearly we are in an upward trend,” he said.

MOST VIEWED

  • Locations shut, dozens more Covid-19 positive

    The Ministry of Health has closed 23 locations in connection with the February 20 community transmission of Covid-19 and summoned for testing anyone who had direct contact with affected people and places. The number of discovered related infections has risen to 76, including 39 women. In a press release,

  • Kingdom's Covid cluster cases jump to 194

    The Ministry of Health on February 25 confirmed 65 new cases of Covid-19, with 58 linked to the February 20 community transmission. The latest cluster cases include nine Vietnamese nationals, five Cambodians, one each from Korea, Singapore and Japan, with the rest being Chinese. This brings the total number

  • Cambodia's Covid cluster cases rise to 137

    The Ministry of Health on February 24 recorded 40 more cases of Covid-19, with 38 linked to the February 20 community transmission. Of the 40, two are imported cases involving Chinese passengers. The 38 include two Vietnamese nationals and one Cambodian, with the rest being Chinese. This brings the total cases

  • Covid cluster raises alarm, health bodies urge vigilance

    The Ministry of Health and the World Health Organisation (WHO) in Cambodia have expressed great concern over the February 20 cluster transmission of Covid-19 in the community. Both entities appealed for vigilance and cooperation in curbing further spread of the virus. Ministry spokeswoman Or Vandine said

  • PM confirms third Covid-19 community transmission

    Prime Minister Hun Sen on February 20 announced the Kingdom's third outbreak of Covid-19 community transmission after 32 people tested positive in just over 10 hours. Addressing the public from his residence after an emergency meeting, Hun Sen said: "I dub it February 20 Community Event, in which 32 cases

  • Cambodia to make auto-rickshaws

    Locally-assembled electric auto-rickshaws could hit the Cambodian market as soon as early in May after the Council for the Development of Cambodia (CDC) gave the greenlight to an investment project at the weekend. According to a CDC press release, it will issue a final registration