Growth may wilt as stimulus fades: World Bank

Shanghai: The global economy will suffer the fallout from the financial crisis for years to come, the World Bank said Thursday in a report warning that growth may wilt later this year as stimulus spending fades.

The Washington-based bank forecasts the world economy will grow 2.7 percent this year, and 3.2 percent in 2011. It contracted 2.2 percent in 2009.

"A great deal of uncertainty clouds the outlook for the second half of 2010 and beyond," the report said.

Though the "acute phase" of the crisis has passed, chronic weaknesses remain. Much depends on the timing of withdrawal from massive stimulus programs and adjustments to monetary policy, the bank said.

Mishandling could result in a "double-dip," with a return to recession in 2011, it warned.

In the US, growth is projected at 2.5 percent in 2010 and 2.7 percent in 2011. European economies will see a slower recovery, with growth forecast at only 1 percent in 2010.

China's economy, whose recovery has led the global rebound, will expand by 9 percent this year and the next, the report said. On Thursday, China reported that its economy surged 10.7 percent in the fourth quarter of last year, with annual growth for 2009 at 8.7 percent.

Developing countries will as usual see higher growth rates, at a combined 5.2 percent this year, but will be plagued by shortages of financing and investment that will handicap their progress.

Rich countries will grow more slowly, by 1.8 percent in 2010, as fragile financial markets and anemic private demand crimp job creation and investment, the report says.