The World Bank is fantastically gloomy about the prospects for the global economy this year:
The World Bank publicly released an update on Thursday [for] 2009, saying it expected the global economy to contract by “close to 3%.” That is sharply worse than the World Bank’s March estimate of a 1.75% contraction. Mr. Zoellick said that while there are signs of an easing of the recession in wealthy countries, developing nations are suffering from a drop in exports, remittances and foreign investment.
….Mr. Zoellick described the global downturn as occurring in “waves.” In the first wave, the financial crisis battered the U.S. and Europe. As markets in wealthy countries dried up, a second wave, hit developing nations. Now a third wave is weakening financial institutions in those countries, which could produce a fourth wave that could further undermine financial institutions in the U.S. and Europe.
Italics mine. That’s a huge change in just three months. Zoellick didn’t provide any details about why the Bank’s forecast has plummeted so dramatically since March, but their economists must be seeing some pretty sizeable deteriorations to drive a change this large.
On the bright side, the IMF thinks that the recovery in 2010 will be stronger than they previously thought. I sure hope so.