http://www.thetimes.co.uk/tto/business/markets/article3290280.ece

'0720 Sam Fleming, Economics Editor, reports: The euro crisis is a greater threat to developing economies than the crash of Lehman Brothers, the World Bank has warned. In its Global Economic Prospects report for 2012, the Bank lowers growth forecasts for developing nations to 5.4 per cent and for wealthy nations to 1.4 per cent.

It urged developing countries to “prepare for further shocks while there is still time”, amid deep concern about the potential for the euro crisis to worsen further and spill worldwide. The euro area is predicted to suffer a 0.3 per cent contraction this year, following growth of 1.6 per cent in 2011. Growth in China will cool to 8.4 per cent from 9.1 per cent.

Developing nations have less room for manoeuvre now than they did in the slump of 2008-09, leaving them exposed to developments in the single currency region, it explained. The Washington-based lender said that capital flows into developing countries had already weakened amid a retreat by global investors. In the second half of 2011 flows tumbled to $170 billion (£110 billion), it said, just over half the level of a year earlier.

The World Bank fears that if the crisis is not successfully contained, “the world could be thrown into a recession as large or even larger than that of 2008-09”. '