The World Bank said the global recession in 2009 will be even deeper than previously predicted, with developing nations facing increased poverty and unemployment.
The World Bank said in a report issued Monday that the global economic recession and associated market turmoil caused a steep drop in international capital flow to investments in less developed countries in 2008. The bank said foreign investments are expected to fall further this year.
Earlier this month the World Bank said the global economy will shrink by 2.9 percent. In March, the Washington-based lender had said the economy would decline 1.7 percent.
The bank said the world economy should start to grow again in late 2009, but recovery will be slower than expected.
It urged countries to make "bold" policy measures to revive lending and growth.
The World Bank's economic forecast is even more pessimistic than expected predictions by its sister organization, the International Monetary Fund.
Reports on Bloomberg and Reuters quoted unnamed sources saying the IMF is raising next year's growth prediction to hit 2.4 percent, up a half a percent from what earlier IMF studies predicted.
Some information for this report was provided by Bloomberg, AP and Reuters.