March 12, 2009

LONDON (Reuters) - The global economy is on track for its worst recession since the 1930s with output likely to shrink by 1-2 percent this year, World Bank President Robert Zoellick told the Daily Mail newspaper. Central and eastern European countries were particularly vulnerable, he said, urging rich nations to do more to fill the financing gap left by an exodus of capital from the developing world.

My guess is that growth will probably fall about 1 to 2 percent, he told the paper in its Thursday edition. We haven't seen numbers like that since World War Two, which really means the Thirties. So these are serious and dangerous times. The head of the International Monetary Fund, Dominique Strauss-Kahn, warned the world on Wednesday it would be gripped by a "Great Recession" and that his earlier forecast for economic stagnation this year was too optimistic

Zoellick trade would probably fall at its fastest rate in 80 years. Eastern Europe was especially at risk, he said, noting that many countries in the region had the problem of assets such as mortgages denominated in foreign currencies which had leapt in local terms. Central and eastern Europe is particularly exposed because over the last two decades it moved quickly to integrate with trade, investment and remittances, he said.