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Global poor to increase by 89 million by end of 2010, World Bank says

Low-income countries are still reeling from the effects of a world financial crisis created by their wealthier counterparts, the bank says in a paper prepared for next week's G-20 meeting.

September 17, 2009|Annys Shin

WASHINGTON — The global recession is expected to push 89 million more people into extreme poverty by the end of 2010, the World Bank said Wednesday as it called on the leaders of the 20 largest economies to engage in "responsible globalization."

Although economic data show that the worst recession of the post-World War II era might have ended for the United States and that global trade has begun to pick up again, low-income countries are still reeling from the effects of a financial crisis created by their wealthier counterparts.

In a paper prepared for next week's Group of 20 nations meeting in Pittsburgh, the bank said the sharp drop in trade, remittances, tourism and capital flows caused by the global downturn had forced governments in the poorest nations to cut spending in critical areas including education, health and infrastructure.

"We are entering a new danger zone not of free-fall but complacency," World Bank Group President Robert B. Zoellick said Wednesday. "You have pledges, you have people who have intentions, but it's not operationalized yet."

The G-20 leaders are expected to spend much of the summit assessing the state of the global economy and the need for further stimulus measures. A larger concern that has emerged from the crisis is that global economic growth was too dependent on U.S. consumer spending and led to imbalances in trade and capital flows that helped fuel the housing and stock bubbles and subsequent busts.

The World Bank, created to finance development in poor countries, called on the G-20 to set up an emergency loan program to help poor countries so they "won't be left defenseless in the face of shocks" not of their own making.

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Shin writes for the Washington Post.

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