World Bank warns of substantial global economic slowdown in 2012

In a report Wednesday, the World Bank warned that growth forecasts for 2012 in many regions of the world have been revised lower. Overall, the World Bank lowered its growth forecast for 2012 to 5.4 percent (from June estimates of 6.2 percent) for developing countries and 1.3 percent for high-income countries (from 2.7) and negative 0.3 percent for the Euro Area (from 1.8 percent).

"An escalation of the crisis would spare no-one. Developed- and developing-country growth rates could fall by as much or more than in 2008/09" said Andrew Burns, Manager of Global Macroeconomics and lead author of the report.

The report also explained that the slowdown in growth is already evident in "weakening global trade and commodity prices." Global prices of energy in 2011 were down 10 percent and metals and minerals prices fell 25 percent.

For the United States, the World Bank cut its growth forecast for 2012 down to 2.2 percent from 2.9 percent and 2.4 percent for 2013 from 2.7 percent. GDP Growth in the East Asia and Pacific region is expected to be around 7.8 percent following an 8.2 percent increase in 2011 and 9.7 percent in 2010.

Latin America and Caribbean grew by an estimated 4.2 percent in 2011, but this is expected to ease to 3.6 percent growth in 2012, before picking up to 4.2 percent in 2013.

GDP in South Asia slowed to an estimated 6.6 percent in calendar year 2011, from 9.1 percent in 2010, and the region's GDP growth is projected to ease further to 5.8 percent in 2012, before strengthening to 7.1 percent in 2013.

Growth in Sub-Saharan Africa remained robust in 2011 at 4.9 percent and Sub-Saharan Africa's growth is predicted to increase to 5.3 percent in 2012 and 5.6 percent in 2013.