World Bank warns of poverty, child deaths


Thousands of children could die as a result of the September 11 attacks, World Bank president James Wolfensohn says

By CNN's Geoff Hiscock

WASHINGTON -- The September 11 terror attacks in the U.S. could put as many as 10 million more people in poverty next year and trigger the deaths of 40,000 children, the World Bank has said.

In a report released Monday, the bank said the attacks could lower economic growth in developing countries next year by between half and three-quarters of a percentage point.

That in turn could hamper the fight against childhood diseases and malnutrition, putting the lives of many children at risk.

World Bank president James Wolfensohn told CNN that the loss of confidence that followed the attacks could result in slower economic activity worldwide.

Growth to fall sharply

Before the September attacks, the bank said that because of a global slowdown, it expected growth in developing countries to fall from 5.5 percent in 2000 to 2.9 percent in 2001. It would then likely rebound to 4.3 percent in 2002.

But because the attacks would delay the recovery of rich countries heading into 2002, growth in developing countries could be lower by 0.5 to 0.75 percentage points in 2002.

The World Bank's growth forecast for developing countries in 2002 is now 3.5 to 3.8 percent. For high-income countries, the figure is 1 to 1.5 percent next year, compared with a forecast of 2.2 percent before September 11.

The bank said the impact would be felt across the developing world, but particularly in Africa.

'Children will die'

"We estimate that tens of thousands more children will die worldwide and some 10 million people are likely to be living below the poverty line of $1 a day because of the terrorist attacks," Wolfensohn said in a statement issued with the report.

"This is simply from loss of income. Many, many more people will be thrown into poverty if development strategies are disrupted," he said.

The bank said there were already signs that higher costs and reduced economic activity was damping global trade. Insurance and security costs, and delays at customs clearance are among the main factors pushing up the costs of trade.

As investors flee to safer havens, the already weak flow of capital to developing countries will decline further.

An additional 20,000 to 40,000 children under five years old could die from the economic consequences of the attacks as poverty worsened in developing countries, the bank added.

World trade

World Bank chief economist Nicholas Stern said it was more important than ever to maintain world trade, as slowdowns are often accompanied by pressure to boost protectionism.

The bank said that to continue the fight against poverty in the wake of the attacks, several steps were crucial.

Boosting government aid to developing countries, reducing trade barriers through another round of world trade talks, more coordination of economy policy by the major industrial countries, and building a social consensus for continued reforms in developing countries were key.

Another global financial institution, the International Monetary Fund, said last week there was no doubt the attacks were having a negative effect. They had increased what were "already significant downside risks" to the short-term global economic outlook.

Its own projections for developing countries, made before the attacks, are 4.3 percent this year and 5.3 percent next year.

IMF chief economist Ken Rogoff, speaking at a September 26 press conference launching the fund's October 2001 World Economic Outlook, said it was premature to try to quantify exactly the implications of the attack for growth in the U.S. and elsewhere.

While he said there clearly would be a short-term effect on economic activity, there was still a "reasonable prospect a recovery will begin in the first half of next year".