The United Nations predicted Wednesday that the global economy will shrink 2.6 percent this year as a result of the world financial crisis – a considerably deeper downturn than the 0.5 percent contraction forecast in January.
In its midyear economic projections, the U.N. said developing countries have been disproportionately hardhit by the global economic crisis.
The crisis started in developed countries, but the U.N. report said developing nations have suffered most from capital outflows, rising borrowing costs, collapsing world trade, lower commodity prices and falling remittances from overseas workers. [emphasis mine]
The good news is that it may all get better next year…unless of course it gets worse. But for now, the crisis continues to pummel those who are least able to weather the storm. And consider this: only seven countries are on target to meet the minimum growth rate to significantly reduce their poverty rates. This will understandably make the already ambitious Millennium Development Goals even harder to achieve, but, given the culpability of developed nations in causing the crisis, only increases their imperative to contribute to global poverty reduction.
(image from flickr user IFRC under a Creative Commons license)