Global Biz

'Double-dip' recession unlikely: economist

Updated: 2011-06-08 13:19
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WASHINGTON - The odds of global economy now slipping into a "double-dip" recession are slim, but the ongoing global recovery is confronted with a set of lingering uncertainties, Justin Yifu Lin, the World Bank's chief economist, said here on Tuesday.

The global economic recovery is underway with challenges including spiking oil and food prices as well as euro zone sovereign debt crisis, Lin told Xinhua in an exclusive interview after the World Bank released on Tuesday its latest Global Economic Prospects report.

In the updated data of its forecast in January, the Washington-based Bank predicted that the global real gross domestic product is expected to grow 3.2 percent in 2011 before picking up steam to 3.6 percent next year.

"Although the Bank's prediction for this year's global economic growth edges down 0.1 percentage point from its January prediction, the overall global economic recovery momentum and a two-speed growth pattern have not changed," Lin argued.

On the double-dip recession woes triggered by a recent dose of weak economic data released in the United States and other advanced economies, the World Bank's senior vice president said the slower economic growth pace of the advanced economies is in line with the Bank's prediction, but a double-dip recession is unlikely to take hold in the near term.

However, the renowned economist held that high-income nations need to continue grappling with stubbornly high unemployment rates, fiscal consolidation and a slack of their production capacity.

In its latest global economic check-up, the Bank predicted that high-income countries will see growth drop from 2.7 percent in 2010 to 2.2 percent in 2011 before picking up to 2.7 percent and 2.6 percent in 2012 and 2013, respectively.

Lin argued that advanced economies bear the brunt of the financial crisis, which adds to the difficulty of economic risks including the structural unemployment challenge, fiscal adjustment and banking sector restructuring.

He noted that high-income countries could learn from the experience of China and other developing nations in beefing up infrastructure investments when going through faltering economic growth, as this could create more jobs and bolster growth in the short run, and help enhance the nation's production capacity in the long run.

The fast rise of emerging economies in recent years has contributed to the global recovery and helped shape a multi-growth polar world in the 21st century, he said.

The World Bank projects that the growth rate of developing countries will ease from 7.3 percent in 2010 to around 6.3 percent each year from 2011 to 2013.

"Although the growth rate of developing countries will be slower compared with 2010, an annual growth rate of more than 6 percent is still robust," he said.

Lin said emerging economies like China still have great potential for technological innovation and industrial upgrading, while sustainable and fast economic growth of these economies could also create more external demand for advanced economies.

He cautioned that emerging economies should keep a close watch on spiking inflationary pressure, economic overheating and possible asset bubbles in the real estate sector, adding that further increases in already high oil and food prices could significantly curb global economic growth and hurt the poor.

"Global recovery is continuing, but we still have some way to go before we can feel comfortable," he said.