Demand for Loans From the World Bank Nears Crisis Levels

Demand for loans from the World Bank is nearing crisis levels as developing countries continue to struggle with the weak global economy.

The Guardian reports:

Ahead of its half-yearly spring meeting in Washington later this week, the Bank said it expected to lend more than $150bn (£105bn) in the four years from 2013 — a period when global economic activity repeatedly failed to match expectations.

The Bank said its growth forecast of 2.9% for 2016 already looked under threat after a deterioration in the outlook since the start of the year, adding that it was increasing its financial help to both middle-income and the least-developed countries.

Those developing countries that rely heavily on exports of commodities have been hard hit over the past two years by the slowdown in China, which has led to a crash in the cost of oil and industrial metals.

“We are in a global economy where growth is expected to remain weak, so it is critically important that the World Bank play our traditional role of helping developing countries accelerate growth,” said Jim Yong Kim, the bank’s president.

The global crisis of 2008-09 led to a surge in World Bank lending to middle-income countries that struggled as trade flows and industrial production fell at rates similar to those in the early stages of the Great Depression.

Demand for loans subsequently fell back from a peak of $44bn in 2010 to $15bn in 2013, although the Bank said it had risen to $23.5bn in 2015 and would top $25bn in 2016.

Read more.

—Posted by Alexander Reed Kelly.