| Kippreport.com

Brace yourself: Grim forecast for 2012, says World Bank

January 18, 2012 3:14 by Reuters

High-income countries have prime responsibility for preventing a crisis, the World Bank said, but “developing countries have an obligation to support that process both through the G20 (Group of 20 rich and developing countries) and other international fora.”

Among other things, developing countries “could help by avoiding entering into trade disputes and by allowing market prices to move freely.”

It also said developing-country governments should start contingency planning to identify spending priorities and to try to shore up safety net programs. Those contingencies should take into account possible drops in commodity prices and a fall in capital inflows, the World Bank said.

The World Bank forecast is lower than ones from the International Monetary Fund and the Organisation for Economic Co-operation and Development, who last officially updated their numbers in September and November, respectively.

The IMF, which has said it expects to cut its forecasts had predicted world growth of 4.0 percent in 2012, while the OECD had pencilled in 3.4 percent. (Reporting By Glenn Somerville and Lucy Hornby; Editing by Chizu Nomiyama and Neil Fullick)

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Tags: debt, downtown, euro, Europe, sovereign debt, World Bank