Saman Kelegama, head of the Institute of Policy Studies in Colombo told an economic forum organized by his think tank, that the crisis is getting much worse than originally envisaged, though a recovery was still expected in 2010.
The International Monetary Fund (IMF) had in April 2008 projected a growth of 0.6 percent for the USA for 2009, which was downgraded to a negative 0.7 percent in October and to a negative 2.0 in January this year.
The Euro area which was projected to grow 1.2 percent in an April assessment was subsequently downgraded to -0.5 in October and later -1.6 percent.
Developing countries were getting battered from the crisis with early expectations of being 'de-coupled' from the global crisis proving to be a myth, Kelegama said.
The fallout in developing countries, part of whose populations were already poor, could be more harmful.
"Developing countries have seen lower growth, but it is the developing world that is most vulnerable," says Naoko Ishii, head of the World Bank office in Sri Lanka.
"This could trap 46 million more people in poverty as economic growth slows."Quoting World Bank chief Robert Zoellick, Ishii says what began as a financial crisis, became an economic crisis, which is now turning into an "unemployment and human crisis."
World Bank's regional economic advisor for South Asia, Shekar Shah says official growth forecast in the region was higher than consensus external forecasts.
"There is a process of denial, in our policy makers, and population," Shekar said.
He says a "quicker realization of the magnitude of the problem" would result in better planning to counter possible problems as it is better to be prepared for the worst than be caught napping.
"If then the scenario is better it is well and good," he said. "Better be prepared. Denial has little space."
Most developed countries were now resorting to higher government expenditure to counter slowing private expenditure and lower credit growth in a bid to boost economic activity.
Developing countries, especially in South Asia who had already run high budget deficits and lived it up in the 'good' years and had a very high levels of national debt, or had high inflation, were finding it more difficult to ramp up expenditure.
South Asia also had the second highest inflation among middle income nations after the Middle East and North Africa region. High inflation shows weak monetary and perhaps fiscal management as well.
India, a country that had cut deficits in recent years, was now in a better position to ramp it up.
Sri Lanka's deputy finance minister Sarath Amunugama said that Sri Lanka had run high budget deficits for 30 years.
"India is now catching up with us," he quipped, saying people who preached fiscal prudence were now saying the opposite.
Many developing countries that had been spendthrift when the going was good, were now finding that they had no fiscal space to run 'counter-cyclical' fiscal policy now.
"In the past we had pro-cyclical growth policies," says Shekar. "Expenditures were of poor quality."
Pakistan was in serious trouble long before the crisis, and was one of the first countries to seek IMF help.
Sakib Sherani, chief economist of Royal Bank of Scotland in Pakistan, says the central bank was monetizing debt (printing money to finance government deficits) and an IMF program had now put the country in a "fiscal straight-jacket."
But analysts say unlike in developed countries where people had jobs and were used to high standards of living, people in poor countries, who became poorer or lost an opportunity to climb out of poverty, may not really realized what they are missing.
As a result, policymakers in developing countries and their rulers would face less of a backlash from their constituents than the more savvy and demanding voters in advanced democracies.
Analysts also warn that countries whose agricultural sectors benefited from a food price bubble will find that farming will no longer be as lucrative as it was in the past few years, just like oil exporters and primary commodity exporters in Africa are finding out now.