Speaking before a weekend meeting of finance ministers from the Group of Eight in Italy, World Bank President Robert Zoellick, said the global economy will contract even more sharply than expected in 2009. He said indications were that the world economy would shrink by nearly 3 per cent which was more than the estimate of 1.75 per cent made in March.

According to Zoellick he believed that some aspects of recovery would be evident in 2009 and 2010, but from a policy perspective that was not the core question as there is a large degree of uncertainty.

He added that previous recoveries in developed economies had been quick but there were concerns this time as the process would be slow because of very low capacity utilization and questions about sources of demand.

The global recession, set off by the collapse of the US housing market, has triggered soaring unemployment as companies have moved to respond aggressively to the slump in demand.

He added that even with the projected recovery in 2010, most developing countries would continue to be hit by aftershocks with increasingly dismal prospects until the drop in their exports, remittances and foreign direct investment was reversed by the end of 2010.

"There is much more we need to do in the coming months to mobilize resources to ensure that the poor do not pay for a crisis that is not of their making," Zoellick said. "There is a big price to pay if you don't support these countries."

He added that he would push for continued support for poor nations at the G8 summit. He said the World Bank projections indicated a financing gap for developing countries of the order of $350 billion and $635 billion in 2009.

Zoellick said that low-income countries that have limited borrowing capacity due to low reserves and drained national budgets would be particularly vulnerable and face difficulties in getting sufficient finance in the next few years.

In such conditions, lending from the World Bank, the IMF and other sources would become increasingly important as the crisis took in low-income countries.

He said that the World Bank's International Development Association which focuses on 78 of the poorest countries, had been inundated with requests for assistance. He added that he would urge countries to honour their pledges to the fund.

Meanwhile, the International Monetary Fund, which has rescued countries from Iceland to Pakistan in the past year, has raised its forecast for global growth in 2010 to 2.4 per cent, according to an informed source.

The IMF, the 185-member Washington-based lender said in April that it projected a 1.9 per cent growth next year while in its World Economic Outlook released in April, the IMF has predicted a contraction of 1.3 per cent this year.