World Bank estimates 3.3% GDP growth in 2011

The global economy in 2011 and 2012 is shifting into a phase of slower but solid growth, with India and China contributing towards almost half of the global growth, says the World Bank’s latest Global Economic Prospects 2011 report.

The World Bank estimates that global GDP, which expanded by 3.9 percent in 2010, will slow down to 3.3 percent in 2011 before reaching 3.6 percent in 2012. Developing countries are expected to grow by seven percent in 2010, six percent in 2011 and 6.1 percent in 2012.

They will continue to outstrip growth in high-income countries that will expand by 2.8 percent in 2010, 2.4 percent in 2011 and 2.7 percent in 2012.

The South Asian region is projected to post 7.9 percent GDP growth on average over the 2011-2012 fiscal years.

This compares with estimated growth of 8.7 percent in fiscal year 2010, against the estimated 9.2 percent growth in 2010. The Indian economy is projected to grow at 8.5 percent in 2011 and 8.7 percent in 2012, according to the report.

A recent move toward tighter monetary policy will likely need to be pursued further, given the region’s high fiscal deficits (the largest among developing regions), high inflation and deteriorating current accounts, it said.

According to Global Economic Prospects 2011, the GDP in most developing countries has regained levels that would have prevailed if there were no boom-bust cycle.

“On the upside, strong developing-country domestic demand growth is leading the world economy, yet persistent financial sector problems in some high-income countries are still a threat to growth and require urgent policy actions,” said Mr Justin Yifu Lin, the World Bank’s chief economist and senior vice president for development economics.

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