The economic news continues to worsen. A new World Bank report forecasts a crisis that will spare no country and threatens to roll back decades of progress in the war against poverty. In one of the more sickening ironies of the moment, developing nations may be hurt the worst, even though they are bystanders in this financial catastrophe. While most governments are focused on stimulating their own economies, the world's poorest citizens will have to turn to international financial institutions that are already overburdened and dependent on struggling developed nations for desperately needed funding.
The World Bank concludes that the world is about to enter the first global recession since World War II. Global industrial production fell 20 percent in the fourth quarter of 2008, and world trade registered its first decline since 1982 — and the sharpest drop in 80 years. The International Monetary Fund estimates 2009 global economic growth at minus 0.5 percent to minus 1 percent. Just a year or two ago, economists were debating whether developing economies, especially those in Asia, had decoupled themselves from the developed economies. That debate is over.
The World Bank report said 94 of 116 developing countries have been hit by the crisis. Forty-six million people in developing countries will be forced into poverty this year as a result of shrinking export markets, a drop in remittances that migrant workers send home to their families — total of $305 billion in 2008 — and only $165 billion in loans (World Bank estimate) this year to emerging markets, 17 percent of the 2007 amount.