The World Bank has warned that the global economy could return to the dark days of the 2008 crisis, with slowing growth and rising commodity prices.
After the recession in 2009 and the 2010 rebound, the multilateral institution said, 2011 is expected to be a year of deceleration. In its latest projections, the bank estimates global growth of 3.3% this year, after 3.9% in 2010.
Emerging and developing countries were expected to expand 6%, down from a 7% pace in 2010, the bank said in its latest Global Economic Prospects report. But that was more than double the 2.4% rate expected to be clocked by high-income countries this year, slowing from a 2.8% rate in 2010.
Still the overall pace of growth is too weak to give the recovery solid traction, the World Bank said.
'Unfortunately these growth rates are unlikely to be fast enough to eliminate unemployment and slack in the hardest-hit economies and economic sectors,' it said.
'Serious tensions and pitfalls persist in the global economy, which in the short run could derail the recovery to differing degrees,' it also warned.
Threats that could derail the recovery include the euro zone financial market crisis, volatile capital flows and the rising prices of commodities, including food and fuel, the 187-nation institution said.
The World Bank expressed particular concern about rising commodity prices, including food and fuel, driven by loose monetary policies in the developed countries and solid demand in the emerging economies.
'Although real food prices in most developing countries have not increased as much as those measured in US dollars, they have risen sharply in some poor countries,' the World Bank said. 'And if international prices continue to rise, affordability issues and poverty impacts could intensify,' it added.
In 2008, oil prices surged above $147 a barrel in July, then fell to nearly $30 six months later. Currently around $92 in New York, oil prices are above the bank's estimate of $85 a barrel on average in 2011, compared with $79 in 2010.
The 2008 scenario of soaring food and oil prices amid slowing growth, which had revived the word 'stagflation' would likely be avoided, the World Bank said, as long as supply follows the rhythm of demand.
In 2008, a powerful surge in commodity prices was abruptly snuffed out by the bankruptcy of US investment bank Lehman Brothers in September.
