WB: Double-dip recession can't be ruled out

The World Bank's Global Economic Prospects 2010 report said slower growth in developed economies would deprive developing countries of healthy markets for their goods and would cut into investment.

For the moment, worries that Greece's fiscal woes could spread to other highly-indebted countries, such as Spain and Portugal, has not affected growth in developing countries, the World Bank said.

"If markets lose confidence in the credibility of efforts to put policy on a sustainable path, global growth could be significantly impaired and a double-dip recession could not be excluded," the report said.

US Federal Reserve Chairman Ben Bernanke, in testimony to lawmakers on Wednesday, said a double-dip recession in the United States could never entirely be ruled out. The Fed has forecast US growth this year of 3 percent to 4 percent.

The World Bank called for "significant" fiscal consolidation in advanced economies, adding that simulations conducted by the bank showed that the quicker it happened, the better it would be for developing economies.

The bank also said industrialized countries should seize the opportunities offered by stronger growth in developing countries to boost economic activity.

Still, the report warned that a prolonged period of rising sovereign debt could make credit more expensive and curtail investment and growth in emerging markets.

It said current data suggests that through the end of March the global economic recovery remained robust in most countries, with the exception of Western European nations where it had stagnated.

Euro zone countries have committed to austerity measures to bring their public finances under control, and unveiled a $1 trillion plan to stop the crisis from spreading with the help of the International Monetary Fund; Kazinform cites China Daily.

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