By Jason Simpkins
The World Bank said today (Wednesday) that it plans to triple its lending to developing nations this year in an effort to prevent a "human crisis" that has been brought about by economic turmoil.
The amount the World Bank lends to developing countries such as China, India and Brazil could reach $35 billion for the 12 months ending June 30. That's almost triple the $13.6 billion doled out to developing countries over the last fiscal year. The bank said it is prepared to commit up to $100 billion over the next three years, with the majority of the funds to be made available through its International Bank for Reconstruction and Development (IBRD).
"The global financial crisis, coming so soon after the food and fuel crises, is likely to hurt the poor most in developing countries," World Bank President Robert Zoellick said in a statement.
Emerging markets, which were flooded with speculative cash prior to the financial crisis, have seen a rapid withdrawal of private investment. Investment in infrastructure, education, and healthcare projects have been scaled back as a result, undoing much of the progress achieved over the past decade.
"The response to this crisis must be global, coordinated, flexible and fast," Zoellick said. "It is more critical than ever that the international community acts in a coordinated and supportive way."
The World Bank has lowered its 2009 growth estimate for developing countries to 4.5%. The bank projected 6.4% growth for emerging markets as recently as June.
The bank estimates that a 1% decline in emerging market growth pushes an additional 20 million people into poverty.
World Bank estimates for global growth were also revised downward. The bank lowered its global economic growth estimate for 2009 to 1% from the 3% it projected in June. That is significantly lower than the International Monetary Fund (IMF) November 6 estimate of 2.2%.
Growth in developed countries will shrink by 0.1% next year, and global trade may suffer its first decline since 1982, the World Bank said.
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