World Bank Predicts Global Economy will Shrink in 2009

While we think things have been bad here in the US related to our own economy, the World Bank is predicting that it's going to be much harder for some other countries.

The report, released on Sunday, was prepared for a meeting next week of finance ministers from the 20 industrialized and large developing countries. It warned that the financial disruptions are all but certain to overwhelm the ability of institutions like itself and the International Monetary Fund to provide a buffer.

The bank, which provides low-cost lending for economic development projects in poorer countries, pleaded for wealthy governments to create a “vulnerability fund” and set aside a fraction of what they spend on stimulating their own economies for assisting other countries.

“This global crisis needs a global solution and preventing an economic catastrophe in developing countries is important for global efforts to overcome this crisis,” said Robert B. Zoellick, the World Bank’s president. “We need investments in safety nets, infrastructure, and small and medium size companies to create jobs and to avoid social and political unrest.”

The bank said that developing countries, many of which had been growing rapidly in recent years, are being devastated by plunging exports, falling commodity prices, declining foreign investment and vanishing credit

.
Their proposed solution is for rich countries to give 0.7 percent of the money they spend to stimulate their own economies to help stabilize poorer countries. That so far has not been discussed publicly very often in relation to the billions of dollars that is being planned on being spent to stimulate the US economy.