Slowdown of global economy could impact developing countries

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The global economy has entered a dangerous phase and could be on the brink of a new recession, the World Bank has warned.

In its latest bi-annual report on the global economy, the Bank says the financial turmoil has spread both to developing and high income countries.

An escalating debt crisis in Europe and weak growth in countries like Brazil and India are some of the factors dimming global growth prospects in 2012.

Andrew Burns, a senior economist, is the lead author on this report.

"Right now we have a serious increase in risk-aversion, investors' jitters throughout the world and this is beginning to affect the developing countries, something that hadn't been the case earlier. As a result we have seen capital flows in developing countries decline by almost 50% have major developing countries offering slower growth now that they were earlier and that happening at the same time as Europe enters into a recession offers a pretty worrisome conjucture."

The Bank has lowered its growth forecast for 2012 to 5.4 percent for developing countries and 1.4 percent for high-income countries.

Duration: 30″

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