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World Bank warns of global economy contraction: more stimulus needed

World Bank warns of global economy contraction: more stimulus needed article image

The latest World Bank forecast has revised its economic forecast to a 2.9 percent global contraction, more than the 1.7 percent initially predicted. World Bank economist Justin Lin said governments need to continue their financial stimulus measures to support their weakening economies. "It is very important to let the stimulus continue until the capacity utilisation returns to a normal level. Otherwise, there is always a danger that unemployment will rise and growth slow down," he said. The World Bank forecast also predicted the top two economies, the USA and Japan would contract at a greater rate than initially forecast. The USA would shrink by three percent, and Japan by 6.8 percent, more than the 2.4 percent and 5.3 percent contraction forecast last quarter.

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