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The World Bank has cut its 2009 global growth forecast, saying the world economy will shrink by 2.9 percent and warning that a drop in investment in developing countries will increase poverty.

"The global recession has deepened," the Washington-based lender said in a report.

Global trade is expected to plunge by 9.7 percent this year, while total gross domestic product for high-income countries will contract by 4.2 percent, the bank said. It said economic growth in developing countries should slow to 1.2 percent — but excluding China and India, developing economies will contract by 1.6 percent.

The bank’s latest forecast is a sharp reduction from its March prediction of a 1 fast cash advance.7 percent global contraction, which it said then would be the worst on record.

Economic damage to developing countries "has been much deeper and broader than previous crises," warned the report.

The global economy should start to grow again late this year, but "the expected recovery is projected to be much less vigorous than normal," the report said.

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