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World Bank cuts growth forecast

World Bank cuts growth forecast

The World Bank predicted Wednesday that Cambodia’s economy would contract 2 percent this year as a result of the global economic slowdown, leading to a reversal in some of the human development gains of the last decade.

The forecast, in the bank’s twice-yearly “East Asia and Pacific Update”, came as it predicted a 6.7 percent recovery for developing East Asia and the Pacific on the back of projected growth of 8.7 percent in China.

However, with China removed from the picture, the region was set to expand just 1 percent this year, more slowly than South Asia, the Middle East and North Africa, and only slightly faster than sub-Saharan Africa.

The World Bank predicted in April’s update that Cambodia’s economy would contract 1 percent this year.

The report estimates that 14 million people who would have emerged from $2-a-day poverty if the region’s economies had kept growing at pre-economic crisis levels, will remain in poverty in 2010. Developing East Asia includes China, Indonesia, the Philippines, Thailand, Vietnam, Cambodia, Laos, Mongolia, Papua New Guinea and the island economies of the Pacific.

“Cambodia has been very hard hit,” Ivailo Izvorski, the report’s lead author said via videoconference from Washington. The report projects that the economic crisis could add between 1 and 4 percentage points to the poverty headcount between 2007 and 2010, even though only one-fifth of all households had jobs in sectors directly affected by the crisis.

“There is currently limited data on human development outcomes, but preliminary indications and experiences in other countries suggest that the impact will be a reversal of the very encouraging trends of the past decade,” the report said.

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