- Title: USA/FILE: Aid flows to poor could fall by 20-25 percent
- Date: 10th June 2010
- Summary: JWANENG, BOTSWANA (FILE) (ORIGINALLY 4:3) (REUTERS) VARIOUS OF MINE VARIOUS OF DIGGERS MOVING EARTH AT THE DIAMOND MINE VARIOUS OF WOMAN LOOKING AT DIAMONDS THROUGH MICROSCOPES CLOSE UP OF DIAMONDS LAGOS, NIGERIA (FILE) (REUTERS) STREET SCENE YOUNG MEN SELLING ITEMS TO MOTORIST ON THE BUSY ROAD ELECTRIC GRID GENERATORS
- Embargoed: 25th June 2010 13:00
- Topics: International Relations
- Reuters ID: LVA9KQ51D0AE3Z3MTA68YEMA9BU1
- Story Text: The World Bank's Global Economic Prospects 2010 report, released on Wednesday (June 9) said slower growth in developed economies would deprive developing countries, including those in Africa, of healthy markets for their goods and would cut into investment.
Botswana's key diamond mining sector offers a positive example of growth in Africa this year, as the recovering industry is expected to push gross domestic product figures for the country up to between 3 and 5 percent this year.
In contrast, Nigeria's new finance minister recently announced he has made the creation of jobs and restoring credit his top priorities.
On the streets of Lagos, young people hawk anything from pens to fried peanuts in order to make a living. Most of them are graduates who have not been able to find employment.
Both businesses and consumers in sub-Saharan Africa's second-biggest economy have complained of difficulty in sourcing long-term credit in the wake of the bailout as banks tightened lending criteria.
The World Bank report said industrialised 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.
"On the one hand that seems like it is a European problem and it doesn't concern developing countries but our research suggests that this might actually have an important impact," said World Bank economist Andrew Burns, adding that the bank expects growth of 3.3 percent globally and more than 6 percent for developing countries this year but that could be threatened by the economic crisis in Europe.
For now, the World Bank said worries that Greece's fiscal woes could spread to other highly-indebted countries had not affected growth.
Euro zone countries have committed to austerity measures to bring their public finances under control.
Thousands of public workers marched in Madrid on Tuesday (June 8) as a part of one-day strike to protest salary cuts announced by Spanish government as Spain aims to reduce its budget deficit to 9.3 percent of gross domestic product this year, from 11.2 percent in 2009.
But should the crisis in Europe worsen and spread, the World Bank said the pace of growth in developing countries would slow.
It also said it was concerned that aid flows to the world's poorest countries would fall sharply amid belt-tightening in donor nations.
Aid can represent as much as 20 percent of government spending in some developing countries, Burns noted, saying previous crises in developed countries showed aid flows are likely to fall by between 20 to 25 percent.
The United Nations World Food Programme (WFP) last month announced plans that would make some nations less vulnerable to potential falls as it agreed to buy grain from countries in West Africa that have a surplus to help countries like Niger, which are facing food shortages.
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