To: Les H who wrote (799 ) 10/1/2001 5:51:14 PM From: Don Green Respond to of 49008 World Bank Calls on the Richest Nations To Coordinate Their Economic Policies By DAMIAN MILVERTON Dow Jones Newswires WASHINGTON -- Predicting that the Sept. 11 terrorist attacks could indirectly plunge 10 million people around the world into poverty, officials at the World Bank Monday called for better policy coordination among the richest nations. In a new economic assessment of the attacks on New York and Washington, the World Bank said growth in the developing world will be severely curtailed by the gloomier outlook for the wealthiest economies, particularly the U.S. Finance ministers and central bankers from the group of seven leading industrialized nations are scheduled to meet in Washington Saturday for a meeting that was postponed a week because of the attacks. Nicholas Stern, the World Bank's chief economist, urged this group to continue to show the kind of cooperation that was evident in the wake of Sept. 11, as many of the major central banks dropped interest rates in an effort to minimize economic ripples from the attacks in the U.S. "The major industrial countries are likely to have a greater positive impact if their policies move in the same direction as they did immediately after the attacks," Mr. Stern said. "Building additional coordination into the conduct of economic policy, particularly monetary policy, could help counteract large shocks in the global financial system," he said. The World Bank economist added that fiscal policy "may have to be better-targeted in the coming months," particularly given the need to protect the most vulnerable from the effects of slowing growth. According to revised estimates from the World Bank, advanced economies are seen growing at just 0.9% this year and at between 1% and 1.5% in 2002, compared with 3.4% last year. Before the Sept. 11 attacks, the World Bank was forecasting growth in high-income nations at 1.1% and 2.2% for 2001 and 2002, respectively. Developing countries, particularly Africa, will also be hard-hit by this downturn in the advanced economies, the World Bank said, with capital flows being diverted by investors to only those emerging markets seen to have sound economic and political policies. The developing world is seen growing at 2.8% in 2001 and between 3.5% and 3.8% in 2002, compared with pre-attack predictions of 2.9% and 4.3% growth, respectively. Developing countries grew at a combined rate of 5.5% in 2000, the Bank reported. 1IMF and World Bank Cancel This Year's Annual Meetings (Sept. 17) James Wolfensohn, the World Bank's president, said that the impact of the attacks on the developing world will be measured in millions of people forced into poverty and in the deaths of thousands of children. "We estimate that tens of thousands more children will die world-wide, and some 10 million more people are likely to be living below the poverty line of $1 a day because of the terrorist attacks," Mr. Wolfensohn said. "This is simply from loss of income. Many, many more people will be thrown into poverty if development strategies are disrupted," he said.