Despite the fact that the global economy is currently recovering at a much faster pace than previously estimated, the World Bank has hinted that there is a risk of a double-dip slowdown over the year 2011, if private demand is not effectively replaced by public stimulus.

The World Bank recently released its first global economic forecast since June 2009, and the institution has been more optimistic about the current year's outlook, with the rate of recovery expected to hit a high of 2.7%, instead of the previously estimated 2% growth.

The contraction that the economy had experienced in 2009 was also estimated to be much smaller than expected, with a figure of 2.2% instead of 2.9%.

The outlook for 2001, however, was left unchanged in the report, at 3.2%.

"If the private sector continues to save in order to restore balance sheets, a double-dip recession, characterized by a further slowing of growth in 2011, is entirely possible--especially as the growth impact of fiscal stimulus wanes", the World Bank said.

In its latest report, the World Bank hiked its 2010 economic forecast for high-income nations from 1.8% to 1.3%, but the 2011 estimate, on the other hand, was pulled down from 2.3% from 2.4%. In sharp contrast, economies of developing nations are expected to grow to 5.2% over the ongoing year, and 5.8% in 2011.