Projection of Economic Growth of Developed and Developing Countries Projections made by alternative sources indicate that the global economic meltdown, which started in 2008, is likely to continue and further deepen in 2009. IMF’s World Economic Outlook published in January 2009 portrayed a bleak picture of global economic growth for 2009 with the situation improving in the next year (0.5 percent in 2009 and 3 percent in 2010). Although US and EU, two major economies, registered positive growth during 2008 (1.4 percent and 1.2 percent respectively), both of these were likely to face negative growth in 2009 (-1.6 percent and -2.0 percent respectively), before they revert back in 2010.1 The downturns observed in the developed countries have started to progressively affect advanced, emerging and other developing economies. Economic growth of Middle East countries in 2009 was likely to be 3.9 percent, about 1.5 times lower compared to that in 2008, which was mainly related to lower crude oil price, drying up of foreign capital and declining demand for the region’s energy-intensive industrial and building materials (Gulf Cooperation Council (GCC) Economics and Strategy Report for the fourth quarter of 2008).2 In South East Asia, major economies would experience slow economic growth in 2009 compared to that in 2008: Malaysia (from 5.8 percent in 2008 to 4.8 percent in 2009), and Singapore (3.6 percent to 3.5 percent). The economic growth of China and India would also decline in 2009 (6.7 percent and 5.1 percent respectively). LDCs are likely to experience a 5.1 percent growth in 2009 against 6.4 percent in 2008.3 Recovery was likely to start only in 2010, by some projections. The relatively less adverse impact of the financial crisis on Asian economies, thus far, is perhaps because of the state of the region’s financial institutions which, unlike their European counterparts, had only limited exposure to sub-prime and related financial products. However, these countries are unlikely to remain isolated from the worst consequence. This is also because lower growth rates would induce low demand for goods and services, which in turn will adversely affect their import of goods and services from developing countries. This will seriously affect the exporting sectors in developing countries. It remains to be seen whether Asian financial systems remain unscathed or deepens, as the global crisis unfolds. By all estimates, Bangladesh is likely to face a slowdown of economic growth during FY2008-09. However, projections of economic growth are widely varied according to reports published by different organizations. Bangladesh Bank (BB), in its monetary policy statement of January-June, 2009, had earlier reconfirmed GDP projection made in the national budget for FY2008-09 (6.5 percent growth), which it revised downward later on (6.0 percent). The latest statement mentions a high case of 6.6 percent and a low case of 6.3 percent. However, World Bank (WB) provided a projection with two alternate scenarios; under the best possible case scenario, the economy would grow by 5.4 percent, while under the worst possible case scenario the GDP growth would come down to 4.8 percent. In view of Bangladesh’s global integration, the likely consequences of the crisis on some of the selected sectors of developed and developing countries are of special relevance. These include primary products such apparel, frozen food, leather and jute etc., labour market situation, and flow of remittances and flow of Foreign Direct Investment (FDI) and Overseas Development Aids (ODAs) in these countries. According to World Bank estimates, world trade is projected to experience a negative growth of 2 percent in 2009 in contrast to the growth of 4 percent registered in real terms in 2008. Because of low level of import by USA, global trade has decelerated by 4.4 percent in early 2008.4 According to World Economic Situation and Prospects 2009, the volume of world trade dropped to 2 percent by September 2008, which was one-third of the same period of the previous year. During June-November 2008, the import of apparel, frozen food, leather and jute by major developed countries, such as USA, EU and Canada portrayed a mixed picture. During this period, import of apparels in the USA has declined by -3.14 percent compared to the same period of the previous year, though import in EU and Canada was marginally positive (7.5 percent and 5.8 percent). Similarly, the import of frozen food, leather, and jute goods in US, EU and Canada were either negative or positive at a low level (growth of import of leather in EU is relatively high).