World Bank expects global economy to remain "uncertain"

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SEOUL, June 22 (Xinhua) -- The World Bank said Monday that the global economy is to further stay in "uncertain" conditions, downgrading its earlier forecasts for the global economy in 2009.

The World Bank, during its Annual Bank Conference on Development Economics (ABCDE) held in Seoul, said the world economy is expected to show the worst economic indicators since the World War II.

On its newly-released Global Development Finance report on the sidelines of the ABCDE, the bank projected that the world economy would contract 2.9 percent, down from its forecast of a minus 1.75 percent last March.

A decrease in capital inflows to developing countries, sharply down from 1.2 trillion U.S. dollars in 2007 to 363 billion U.S. dollars in 2009, and a 50 percent-contraction in industrial outputs are among the bad indicators for the economic outlook, the Bank said.

Meanwhile, the bank said, the sluggish economy in 2009 will be followed by a "weak" yet positive growth in 2010, a 2.0 percent and 3.2 percent in 2010 and 2011, respectively, on the back of rapid upturns in developing economies.

In particular, the report said developing nations are expected to drive the global economy out of the recession, with a 4.4 percent and a 5.7 percent growth expected for 2010 and 2011, respectively.

"Developing countries can become a key driving force in the recovery, assuming their domestic investments rebound with international support, including a resumption in the flow of international credit," said Justin Lin, World Bank Chief Economist and Senior Vice President.

The bank, however, still remained cautious on a global rebound down the road, saying there should be a concerted global action along with an expansion in investments to be sure of a recovery.

The World Bank pointed to financial sector reform and support for the poorest countries as prerequisites for a sustainable, complete recovery in the global economy.