We’re not sure what the World Bank’s track record is on this stuff. We’re guessing it’s about as good as any other group at forecasting the economy, which means: crapshoot. But still…
Telegraph: The World Bank today poured cold water on the chances of a robust recovery for the global economy next year, warning instead that the weakness of banks and rising unemployment will cast heavy shadows in 2010.
The Bank also delivered a more pessimistic outlook for this year, expecting the world’s gross domestic product (GDP) to contract by a record 2.9pc. In March it had predicted a decline of 1.7pc.
Although acknowledging that major economies are no longer in free fall, the World Bank is far more cautious than the International Monetary Fund about the strength of a recovery.
Why aren’t they more optimistic? Because, they note correctly, this hasn’t been your normal garden-variety recession (in fact, the days of the garden-variety recession seem gone for good. All downturns going forward will put stress on areas of systemic risk and require massive government intervention). This recession has come after a financial crisis, and those tend to drag on a while.
Meanwhile, the Washington Post correctly notes that even a “recovery” won’t mean anything until we start creating J-O-B-S, and that’s going to be a while.
Despite signs that the recession gripping the nation’s economy may be easing, the unemployment rate is projected to continue rising for another year before topping out in double digits, a prospect that threatens to slow growth, increase poverty and further complicate the Obama administration’s message of optimism about the economic outlook.
The likelihood of severe unemployment extending into the 2010 midterm elections and beyond poses a significant political hurdle to President Obama and congressional Democrats, who are already under fire for what critics label profligate spending. Continuing high unemployment rates would undercut the fundamental argument behind much of that spending: the promise that it will create new jobs and improve the prospects of working Americans, which Obama has called the ultimate measure of a healthy economy. Read the whole thing >