THE World Bank has warned of a possible slump in global economic growth and urged developing countries to prepare for shocks that could be more severe than the 2008 crisis.

The bank cut its growth forecast for developing countries this year to 5.4% from 6.2% and for developed countries to 1.4% from 2.7%. For the 17 countries that use the euro currency, it forecast a contraction, cutting their growth outlook to -0.3% from 1.8%.

Global growth could be hurt by a recession in Europe and a slowdown in India, Brazil and other developing countries, the Washington-based bank said. It said conditions might worsen if more European countries are unable to raise money in financial markets.

The global economy is entering into a new phase of uncertainty and danger, said the banks chief economist, Justin Yifu Lin. The risks of a global freezing up of capital markets as well as a global crisis similar to what happened in September 2008 are real.

Developing countries that have enjoyed relatively strong growth while the US and Europe struggled might be hit hard, Mr Lin said.

He said they should line up financing in advance to cover budget deficits, review the health of their banks and emphasise spending on social safety nets.

Many governments are in a weaker position than they were to respond to the 2008 global crisis because their debts and budget deficits are bigger, Mr Lin said at a news conference. In the event of a major crisis, no country will be spared, Mr Lin said.

The downturn is likely to be longer and deeper than the last one, he added.