Posted by: brittanyng | June 10, 2010

Developing countries lead recovery…

“Developing Countries Lead Recovery, but High-Income Country Debt Clouds Outlook”

I came across this news article on the World Bank website.  Reported June 9, 2010, it discusses the economic recovery advancement on the global scale.  According to the World Bank’s latest Global Economic Prospects 2010, developing economies are expected to grow, while high-income countries will grow, but not enough to undo the contraction in 2009. 

Justin Yifu Lin, the World Bank’s Chief Economist and Senior Vice President, Development Economics sees this as a good thing and an opportunity.  He says that “the better performance of developing countries in today’s world of multi-polar growth is reassuring, but, for the rebound to endure, high-income countries need to seize opportunities offered by stronger growth in developing countries.”

Despite the growth projected for developing countries, they may feel the serious ripple effects of the struggles in high-income countries they are closely related to in trade and financial connections. 

As explained by Andrew Burns, manager of global macroeconomics at the World Bank, “developing countries are not immune to the effects of a high-income sovereign debt crisis, but we expect many economies to continue to do well if they focus on growth strategies, make it easier to do business, or make spending more efficient. Their goal will be to ensure that investors continue to distinguish between their risks and those of these high-income countries.”

Many developing countries may continue to face serious financial gaps, and the fight against poverty over the next 20 years will face great obstacles as high-income countries fight to overcome their own financial crisis.  If financial aid flows decline with the financial slump, this could affect the long-term growth rates in developing countries and potentially increase the number of extremely poor in 2020 by as much as 26 million.  What an even greater reason now to improve health systems in the context of the developing community so that they can function independent of extra aid.

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