World Bank: the global economy is still likely to fall into a second recession

The World Bank's Global Economic Outlook 2010 warned that the worst stage of the financial crisis could have passed, but the global economic recovery remains fragile and must be wary of a possible recession and a new round of asset bubbles The The report predicts that the impact of the financial crisis will change the next 10 years of financial and growth prospects.

China's economy is expected to maintain high growth
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The World Bank report argues that with the implementation of a series of economic stimulus measures, "the most acute stage of the crisis has passed, the world economy is in the process of recovery," the previous credit market is frozen, the extreme reversal of capital flows has ceased to exist.

The report pointed out that from March 2009 so far, the national stock market has basically recovered half of the lost ground, the economic recovery first in emerging economies began, has now fully extended to the developed economies.

According to the World Bank's latest report, global GDP fell 2.2% in 2009, is expected to grow 2.7% this year, in 2011 will grow 3.2%. Developing countries are expected to be relatively strong recovery, which is expected to grow by 5.2 percent this year, and is expected to grow by 5.8 percent in 2011, up from 1.2 percent in 2009.

Among them, the Chinese economy grew by 8.4% in 2009, this year and next year is expected to maintain 9% of the rapid growth. This is second to none in the world, and 7.5% and 8.0% increase in India's next two years.

Developed countries in 2009, GDP fell 3.3%, the recovery trend is relatively slow, 2010 and 2011 growth forecast were 1.8% and 2.3%. Among them, the US economy in 2009 fell 2.5% this year and next year is expected to grow by 2.5% and 2.7%. Japan's economy fell 5.4% this year, this year and next year, only 1.3% and 1.8% increase.

World Bank judgment, world trade in 2009 fell sharply, down as high as 14.4%, but this year and 2011 are expected to grow by 4.3% and 6.2%. In terms of oil prices, oil prices will remain at $ 76 a barrel this year, and other commodity prices are unlikely to show up in the next two years, with an expected increase of around 3%.

Do not rule out the possibility of a second recession

The World Bank pointed out that although the above expectations are most likely to occur, but the world economic recovery is still quite weak, the prospects facing many uncertainties.

The report predicts that by some countries the economic stimulus plan in the gradual withdrawal of the impact of the second half of this year the world economy may slow down again. In addition, the job market is still weak, the unemployment rate will remain high in the next few years. Although the financial market is stable, but still weak. At the same time, Dubai's debt turmoil and Greece, Mexico sovereign credit rating downgrade is also to remind people of potential financial risks.

The report argues that the future sustainability of the global economic recovery will depend on the trend of private consumer demand. If the measures are taken, private consumption will effectively replace government consumption as the driving force of economic growth, the global economic growth in 2011 may be as high as 3.4%; otherwise, when the global economic growth may be as low as 2.5%.

The global economy can be said to be at a crossroads, the report pointed out that although the current forecast of the global economy this year will grow by 2.7% and 3.2%, but the "double bottom" situation, that is, growth in 2011, a substantial slowdown, or strong The possibility of recovery can not be ruled out.

"We can not expect to recover overnight from this deep and painful crisis," said Lin Yifu, vice president and chief economist at the World Bank, who says it takes years to rebuild the economy and employment.

Watch out for asset bubbles

The World Bank's report has spent considerable time explaining the risks faced by developing countries. The report argues that, for developing countries, one of the most uncertainties in the current set of uncertainties is the timing of the "exit strategy".

This is a difficult problem to grasp. The report argues that if the "exit strategy" is implemented too early, that is, private consumption and investment have not yet effectively become the driving force of economic recovery before the exit, the economic recovery will likely die. If this is the case, the developing countries as a whole may have an economic growth of only 5.1 percent in 2010 and only 5.4 percent in 2011. Some countries may be "growing negative in the next quarter or a few quarters."

However, if the "exit strategy" too late implementation, the risk also exists. The root cause of this financial crisis is the proliferation of money supply led to asset bubbles. Crisis fuse is the US housing bubble burst, so that the subprime crisis and the full spread to the real economy.

The report said that if the "exit strategy" can not be implemented in a timely manner, then the huge money supply will lead to global economic inflation, and a new asset bubble, which will once forcing some countries to adopt monetary tightening policy, the resulting results, "May be a new recession".