World Bank warning

“Don’t panic – The Hitchhiker’s Guide To The Galaxy … yes”

That’s senior World Bank economist Mick Riordan, co-author of its latest Global Economic Prospects (GEP), trying to introduce a little levity after the bank warned of weak global economic growth this year and potentially years of economic volatility ahead.

It’s calling on developing economies in Eastern Europe, the Middle East, North Africa, Asia and Latin America to be on their guard to take the strain in case of a serious run on the banks if Europe’s economic situation gets worse.

Mick told me if that happens the effect will be similar to the collapse of Lehman Brothers back in 2008.

But he says developing economies should be able to continue leading global growth if they begin saving for a rainy day now, use any surplus tax revenue to stimulate their economies, and try to focus on the bigger picture and not the daily disaster headlines coming out of the eurozone.

“Maybe stop reacting on a day-by-day basis, refocus their policy energies and efforts on looking again at the medium term,” Mick says.

That’s because in the same GEP the World Bank says it thinks Europe will ultimately find a way to muddle through its current woes.

“I think that the will is there, the financial resources are there, if they decide to do that and it’s in the best interests of the European community as a whole,” the economist tells me.

The bank says all that’s missing is the political will within the eurozone nations – particularly Germany – which is easier said than done.

Only this week, the European Union president floated the idea of a unified European banking system and quick as a flash the Germans rejected the notion.

Nonetheless, the World Bank suggests in the GEP that political agreement is likely to happen in the medium term, rather than run the risk of the implosion of the whole European single currency experiment.