The global economy is set to shrink by one to two percent this year, World Bank President Robert Zoellick said on Saturday, saying the depth of the slowdown was unprecedented since the 1930s Great Depression.
Speaking at a conference in Brussels, Zoellick noted that the International Monetary Fund (IMF) had recently published a forecast that the world economy would shrink by one percent this year, and added:
We in the bank will be coming up with ours again soon, probably in the range of one to two percent...We haven't seen a figure like that globally since World War Two, which really means since the Great Depression.
Zoellick proposed that the Group of 20 major and emerging economies -- whose leaders are due to meet in London next month -- establish a review process to see whether further stimulus measures would be needed to kickstart recovery.
Out of the G20 process one should have a monitoring system, he said, suggesting a system of reviews of the impact of existing stimulus packages agreed by governments.
Some of the packages actually withdraw stimulus in 2010. So given the uncertainty of this crisis I think you want to have a review process to see whether more would be needed in 2010.
Zoellick cited World Bank forecasts of a spike upwards in infant mortality associated with the economic crisis, and warned of a fall-off in world trade.
(Reporting by David Brunnstrom and Mark John)