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The World Bank expects muted global growth led by the developing world in the remainder of 2013, the bank said on Wednesday in its Global Economic Prospects report.
The reports said global economic growth for the year would be 2.2 per cent, lower than the 2.4 per cent estimated in January. Growth is expected to be led by developing countries, which together will have a projected GDP of 5.1 per cent this year, the report said.
The risks from advanced economies have eased, but high-income countries will grow only 1.2 per cent this year, the World Bank said.
High unemployment and weak consumer and business confidence are burdening growth in those countries, it added.
“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.” Uncertainty about the US Federal Reserve’s monetary policy known as quantitative easing also is causing concern. The aggressive economic stimulus is an effort to spur growth and reduce unemployment.
The report predicts that global GDP will strengthen to 3 per cent in 2014 and 3.3 per cent in 2015. Developing countries will lead the way, with 5.6 per cent growth in 2014 and 5.7 per cent in 2015.
The report also said 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. In China growth also has slowed as authorities seek to re-balance the economy there.
Broken down by region, projected growth in East Asia and Pacific is expected to be 7.3 per cent this year; Europe & Central Asica by 6 2.8 per cent. Latin America and the Caribbean by 3.3 per cent; West Asia and North Africa by 6 2.5 per cent; South Asia by 5.2 per cent; and Sub-Saharan Africa by 4.9 per cent.
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