Emerging markets to lead recovery

Published: June 10, 2010

But the threat of a double-dip remains, warns World Bank.

Developing countries will lead the global recovery, according to the World Bank, but will still face the risk of a double-dip downturn.

In its latest Global Economic Prospects report, the bank estimates that developing economies could grow by between 5.7% and 6.2% each year from 2010-2012, compared with growth of between 2.1% and 2.4% in developed economies.

“The better performance of developing countries in today’s world of multi-polar growth is reassuring,” says Justin Yifu Lin, the World Bank’s chief economist and senior vice president, Development Economics. “But, for the rebound to endure, high-income countries need to seize opportunities offered by stronger growth in developing countries.”

The bank’s projections assume that there will be no default or major European sovereign debt restructuring. But the report adds that developing countries may feel “serious ripple effects” and that a second crisis cannot be ruled out in some developing European countries.

“Developing countries are not immune to the effects of a high-income sovereign debt crisis,” says Andrew Burns, manager of global macroeconomics at the World Bank. “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.”