By Abid Aslam WASHINGTON, Apr 26 (IPS) - Relief and lowered expectations are written all over this week's Spring Meetings of the World Bank and International Monetary Fund (IMF).
Relief that the worst appears to be over for world financial markets but lowered expectations because aid and investment remain at depressed levels, pushing back the prospect of recovery.
This is the message from the Bretton Woods institutions and the Washington-based Institute of International Finance (IIF), an association of some 300 leading international banks and finance companies.
World economic growth should hold at about 2.3 percent this year and hopefully will begin to pick up next year, the IMF says. It will take longer for recovery to trickle down from financial markets to the one-third of the globe that has been pushed into recession since financial centres began to quake in mid-1997.
The World Bank says that, if all goes well, world growth should recover to around 4.5 to 5 percent by the year 2001 but developing countries will have to contend with less investment, weak commodity prices and the lowest levels of official development aid since the Bank began keeping records.
Oil prices have broken their long fall because of reduced production but prices of so-called 'soft' commodities such as coffee and cocoa show no sign of perking up, according to the latest market reports.
The private-sector IIF, in its latest projections of capital flows to the developing world's privileged 'emerging markets', actually forecasts ''a significant decline in official flows'' this year.
At the same time, the Institute says private investment in these 29 Southern and former Soviet countries will amount to about 140 billion dollars in 1999 - about the same as last year but less than half the 1996 high mark of nearly 330 billion dollars.
Relatively long-term foreign direct investment in emerging markets remains strong while more short-term portfolio equity flows show signs of recovery, says IIF director John Bond.
For now, those signs of a turn-around reflect not so much real expansion as asset seizures at bargain prices. ''Some of this recovery represents asset values having been sharply depressed by the crises, which has created strong investment opportunities,'' Bond acknowledges.
What's more, the Institute's generally benign aggregate projections gloss over some stark differences in regional prospects.
Net private flows to Latin America are forecast to fall by about 20 billion dollars, to 66 billion dollars this year.
Flows to the Asia-Pacific region are expected to rise by about as much, to 29 billion dollars. Indonesia, Korea, Malaysia, the Philippines and Thailand will see zero net flows this year after foreign investors pulled out 28 billion dollars in 1998.
The World Bank, citing signs that the financial crisis is subsiding, says it is worried about the lingering social costs.
''A year ago we confidently predicted that the international development goals of halving poverty, cutting infant mortality by two-thirds, and enrolling all children in primary education could be met,'' says World Bank President James Wolfensohn. ''Now those goals are at risk.''
''All developing regions have lost momentum in achieving their poverty reduction goals,'' the Bank says in its latest annual compilation of 'World Development Indicators', released here Monday.
The most dramatic losses have been in East Asia, a region once leading the race to halve poverty by the year 2015. Economic turmoil has thrown off that goal by at least two years in Indonesia and 10 years in the Philippines, according to the Bank.
For many countries, however, the malaise predates the financial 'contagion' of the past 20 months.
In Eastern Europe and the former Soviet Union, for example, ''millions of people have seen their living standards deteriorate sharply during their difficult move towards establishing modern market economies,'' the Bank reports.
The number of people in transition economies living below the poverty line of four dollars per day swelled from 14 million in 1989 to 147 million - or one out of every three people - by the mid-1990s.
In addition, adult mortality is increasing in these countries ''due to factors such as smoking, high-fat diet, excessive alcohol use and the stressful psychological conditions of economic transition,'' the Bank says.
Inequality also worsened elsewhere. The Bank lists 34 developing countries - including Jordan, Malaysia, Russia, Peru, South Africa, Ukraine, Venezuela, and Zambia - in which the richest 20 percent of the population has come to receive more than half the country's income, while the poorest 20 percent gets less than five percent.
''There is still some good news to report,'' says World Bank Chief Economist Joseph Stiglitz.
''Over the last 25 years we can see how living standards have risen dramatically,'' he says. ''Since 1970, food production has outpaced the population growth of nearly two billion and 70 percent of adults in the developing world can read today.''
''We are only beginning to measure the effects'' of financial crisis on long-term development, says Shaida Badiee, director of the World Bank's 'Data Group', which produced the report.
''What is clear is that the world cannot afford another 'lost decade' like the one Latin America endured after the debt crisis of the 1980s.'' (END/IPS/aa/mk/99)