In its annual Global Development Finance (GDF) report, the World Bank warned that recovery is “unusually uncertain” and that it expects the global economy to contract by 2.9% this year. The World Bank said as recently as March that the global economy would shrink by 1.7% in 2009.

“While the global economy is projected to begin expanding once again in the second half of 2009, the recovery is expected to be much more subdued than might normally be the case,” the bank said in its report. “Unemployment is on the rise, and poverty is set to increase in developing economies, bringing with it a substantial deterioration in conditions for the world’s poor.”

In the United States, where the unemployment rate is approaching double-digits, the economy is now expected to shrink by 3% this year, rather than the 2.4% the World Bank predicted in March. This is more consistent with U.S. Federal Reserve Chairman Ben S. Bernanke’s warning of a “jobless recovery.”

The World Bank said the Eurozone is now facing an economic contraction of 4.5% after previously predicting a 2.7% decline. Japan’s economy will shrink by as much as 6.8% this year, up from 5.3% contraction it predicted three months ago.

The world’s second-largest economy has been leveled by a sharp drop in exports and soaring unemployment, as evidenced by an annualized 15.2% drop in first-quarter gross domestic product (GDP).

Developing countries will still see growth in 2009, although it is likely to come at a much slower pace. Developing economies will grow by 1.2% on the whole, compared to a 5.9% expansion in 2008 and 8.1% growth in 2007. China and India will be the major growth engines of the developing world, expanding 7.2% and 5.1% respectively. Without these two dynamic economies developing nations would actually contract 1.6% according to World Bank projections.

The economies of Brazil and Russia, which rely heavily on commodities prices, are expected to shrink 1.1% and 7.5% respectively.

While the World Bank expects global growth will rebound to 2% in 2010 and 3.2% by 2011, growth in developing nations will be higher. The bank sees 4.4% growth in emerging markets in 2010 and 5.7% in 2011.

The World Bank’s revelation helped temper some of the optimism that has fueled the recent stock market rally. U.S. stocks suffered their first weekly loss since May last week, and both the Dow Jones Industrial Average and Standard & Poor’s 500 Index logged heavy losses yesterday.  The Dow closed down 201.3 points, or 2.35%, at 8338.7 and the S&P tumbled 28.17 points, or 3.06%, to close at 893.05.

Source: World Bank’s Pessimistic Prognosis Tempers Market Enthusiasm

Seasoned professionals and mainstream financial hacks alike have been baffled by the sheer scale of the market gyrations. They haven’t a clue which way to turn.

But there’s one team of cool-headed profit hunters who are sitting, carefully biding their time, ready to pick up great investments at distressed, knocked-down prices.

All this talk of recession in Western economies doesn’t worry this group. They’re not concerned about US and European stock market weakness – indeed they’ve been predicting it for months.

Right now, they’re leading their small, private circle of investors to position themselves to profit from a global power shift.

Just weeks ago they explained to their members:

“A recession in America will inevitably see a slowdown in the developing economies as well, but the chances of a global recession are low. Instead, we see this as part of the ongoing shift in economic and financial power from West to East as the global financial system adapts to new economic realities…

“…the current sell-off in global markets may well provide one of the greatest profit opportunities of your lifetime – a chance to buy into emerging companies… with enormous long-term growth potential… on the cheap.”

Today you can discover how to get into this team’s latest recommendations “on the cheap” – and how you could make four times your money by the end of 2009. [ Forecasts are not a reliable indicator of future performance.]

Find out how by reading what my colleague has to say right now in his research note: “The moments no investor wants to miss”…

Click here to read it

Not only does this report explain how to spot up-and-coming investment opportunities while mainstream investor focus is elsewhere, it also suggests where the next such opening is emerging right now…

Let me give you a taster before you click through:

This place has the SAME level of foreign direct investment as China… a CHEAPER workforce… and dirt-cheap industrial land…

Merrill Lynch is calling this place a “ten year buy”… Industry Week describes it as being “where China was 10-12 years ago”…

All the things that should excite every bullish investor on the planet… And yet, here we are preoccupied with last year’s stock market disasters!

At a time when everyone’s talking about LOSING money, the chance to make a bit – potentially double your cash inside of 12 months… and even make up to FOUR times your money by 2009 – is, I guess, worth a look.

But what do you think?

Click here to read “The moments no investor wants to miss”

One last thing:

It might be worth mentioning that the team behind this report were amongst the first in the UK to champion the investment potential of China AND Russia.

And though hindsight is a wonderful thing (we all know how both these economies have surged) back then investor feedback was generally NEGATIVE!

But then, so is the reaction to the so-called “crisis” at the moment! Don’t you just love herd mentality?

If it’s not in your nature to be downbeat, or you quite like the idea of using this distraction to capitalise on a little known breaking opportunity, you should have a read of “The moments no investor wants to miss”.

Click here to read more

Kind regards,

Rob Mackrill
Editor
Daily Reckoning