Euro crisis ‘could tip world into slump’

THE World Bank warned developing countries yesterday to prepare for the “real” risk that an escalation in the eurozone debt crisis could tip the world into a slump on a par with the global downturn in 2008/09.

In a report sharply cutting its world economic growth expectations, the World Bank said Europe was probably already in recession. If the eurozone debt crisis deepened, global economic forecasts would be significantly lower.

“The sovereign debt crisis in the eurozone appears to be contained,” Justin Lin, the chief economist for the World Bank, told reporters in Beijing on Wednesday. “However, the risks of a global freezing-up of the markets, as well as a global crisis similar to what happened in September 2008, are real.”