On the positive side, risks from advanced economies have eased and growth is firming but on the negative side the pick-up in developing countries is expected to be modest because of capacity constraints in several middle income countries like Brazil, India, Russia, South Africa and Turkey, warns the multilateral agency. "While there are markers of hope in the financial sector, the slowdown in the real economy is turning out to be unusually protracted," said Kaushik Basu, Senior Vice President and Chief Economist at the World Bank. "This is reflected in the stubbornly high unemployment in industrialized nations, with unemployment in the Eurozone actually rising and in the slowing growth in emerging economies, with India's annual growth having dropped below 6 percent for the first time in 10 years. "Also, there is heightened speculation that the US may withdraw QE (quantitative easing) and widespread concern about its consequences. By going into these topical matters, the World Bank's latest Global Economic Prospects alerts us to both the hopes and the risks in the global economy, and also gives valuable instructions on policy."
So while the global economic growth is projected to expand from about 2.2 percent this year to 3.0 percent and 3.3 percent in 2014 and 2015 respectively, in the high-income countries, fiscal consolidation, high unemployment and still weak consumer and business confidence is expected to keep growth this year to a modest 1.2 percent but firming to 2.0 percent in 2014 and 2.3 percent by 2015. The report states that the developing countries GDP is now projected to be around 5.1 percent in 2013, further strengthening to 5.6 percent and 5.7 percent in 2014 and 2015, respectively. "Growth in Brazil, India, Russia, South Africa and Turkey has been held back by supply bottlenecks. While external risks have eased, growth in these countries is unlikely to reach pre-crisis rates unless supply-side reforms are completed," the report states.
China, which had charted over 9 percent growth for several years, is now expecting around 7 percent growth as authorities seek to rebalance the economy. In a broader region-wise forecast, the World Bank report has projected 7.3 percent growth for the East Asia Pacific region, 2.8 percent for Europe and Central Asia, 3.3 percent in Latin America and the Caribbean, 2.5 per cent in the Middle East and North Africa, 5.2 percent in South Asia; and 4.9 percent in Sub-Saharan Africa. Economic contraction in the Euro Area is projected by the World Bank to be 0.6 percent for 2013, compared with the previous projection of 0.1 percent. Euro Area growth is expected to be a modest 0.9 percent in 2014 and 1.5 percent in 2015.
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The Africa News - Global growth projection lowered to 2.2 pc
