January 19, 2012
THE world's leading economists have warned of a new financial crisis that will cause even more damage than the GFC in 2008.
The World Bank has slashed its global economic forecasts because of the high levels of debt in rich nations.
The Washington-based lender had previously projected a 3.6 per cent annual global growth for the next two years.
But this has been drastically reduced to 2.5 per cent in 2012 and 3.1 per cent in 2013.
"The world economy has entered a very difficult phase characterised by significant downside risks and fragility," the twice-yearly Global Economic Prospects report said.
While financial turmoil appeared contained at the moment, "the risk of a much broader freezing up of capital markets and a global crisis similar in magnitude to the Lehman crisis remains".