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

  • Cambodia unveils new quarantine regulations

    The government has modified Covid-19 quarantine requirements, shortening the duration for, among others, Cambodian officials, foreign diplomats and delegations, investors and inbound travellers in general. According to an official notice signed by Minister of Health Mam Bun Heng late on October 16, quarantine length for Cambodian

  • Cambodia sets new Covid-19 quarantine rules

    The government has modified Covid-19 quarantine requirements, shortening the duration for, among others, Cambodian officials, foreign diplomats and delegations, investors and inbound travellers in general. According to an official notice signed by Minister of Health Mam Bun Heng late on October 16, quarantine length for Cambodian

  • Hun Sen: Cambodia set to fully reopen

    Prime Minister Hun Sen concludes that the October 5-7 Pchum Ben public holiday, during which many people either flocked to their hometowns for family reunion or gathered at tourist attractions across the country, has not caused an outbreak of Covid-19. In a special address to

  • Will Evergrande change the way Chinese developers do business in Cambodia?

    China’s property sector policy has exposed the grim financial condition of real estate developers including those operating in Cambodia, which raises questions over the viability of their projects and business going forward The dark blue netting draping over one of Yuetai Group Co Ltd’

  • Cambodia resumes issuance of tourist visas

    The Ministry of Foreign Affairs and International Cooperation has announced the resumption of its tourist visa and visa exemption programme after a long hiatus due to the Covid-19 pandemic. In a letter dated October 20 and addressed to foreign embassies and consulates, foreign minister Prak Sokhonn

  • Cambodia voted ‘world’s friendliest country’ in Rough Guides reader poll

    Cambodia ranked number one among the “World’s Friendliest Countries”, according to a reader poll conducted by London-based international website “Rough Guides”. Taking submissions through Twitter and Facebook, “Rough Guides”, a well-known travel agency and publisher of guidebooks, said the Kingdom “was by far the