WB: MENA spared worst of economic crisis 

(MENAFN - Khaleej Times) Countries in the Middle East and North Africa region are least affected by global economic crisis so far, according to the World Bank.

The Bank, which has labelled the recession as "one of the sharpest global economic contractions in modern history," forecasts the world economic growth to contract by 1.7 per cent this year, for the first time since the Second World War. However, despite lower oil revenues and cuts in oil output, it predicts the oil exporting countries in the Middle East to grow at 2.9 per cent in 2009. It expects oil to average $47 per barrel for the year.

The Bank in its latest update on Global Economic Prospects report expects growth in developing countries to markedly slowdown due to deepening recession in the developed world. Back in November, the Washington-based institution expected the gross domestic product — total value of the goods and services — in the developing countries to grow at 4.4 per cent this year but the continued deterioration of global financial and economic conditions has prompted the Bank to cut its forecast. It now expects the developing world to grow at 2.1 per cent significantly down from 5.8 per cent in 2008.

Developing countries in Europe, Latin America, East and Central Asia are likely to see their economy contract while countries in South Asia and Sub-Saharan Africa will still be growing but at a far slower pace. It predicts India and Bangladesh to grow at 4 per cent and 4.5 per cent respectively; it expects both South Africa and Pakistan to grow at 1 per cent this year.

Although the Bank expects a very weak recovery in 2010, it noted that economic activity will remain depressed with unemployment persisting for the next two years. "Even if global growth turns positive again in 2010, output levels will remain depressed, fiscal pressures will mount, and unemployment levels will rise further in virtually every country well into 2011," said Hans Timmer, Manager of Global Trends in the World Bank.

"Across the developing world, we see that conditions of recession are affecting the poorest people, making them even more vulnerable than before to sudden shocks—but also reducing opportunities available to them, and frustrating their hopes," said Justin Yifu Lin, World Bank Chief Economist.

The World Bank expects a significant deterioration of government finances in all countries due to falling tax revenues and higher public spending programmes to compensate for private sector. The Bank estimates that about 84 of the 109 developing countries would face problems in repayment of external private debts and without international support, these countries would be forced to erect high import barriers in order to protect their foreign currency reserves.