The World Bank early Wednesday issued a positive outlook for the world economy, but warned that rising interest rates could endanger the expected growth.

Growth is picking up in developing countries and high-income economies appear “to be finally turning the corner,” the World Bank said in its Global Economic Prospects report.

But with the US central bank starting to downsize its “massive monetary stimulus,” there could be “headwinds” from rising global interest rates and “potential volatility in capital flows,” the bank warned.

The bank projected global growth in 2014 at 3.2 per cent, up from the 2.4 per cent in 2013. Growth was expected to reach 3.4 per cent in 2015 and 3.5 per cent in 2016.

“The performance of advanced economies is gaining momentum, and this should support stronger growth in developing countries in the months ahead,” said World Bank Group president Jim Young Kim.

Gross domestic product in the wealthier countries was expected to climb from an average of 1.3 per cent in 2013 to 2.4 per cent in 2016.

In developing and emerging economies, growth is expected to jump from 4.8 per cent in 2013 to 5.7 per cent in 2016. This represents a slowdown from the boom years of 2003-2007, but is “not a cause for concern,” as it represents a “cooling off” of “unsustainable” growth.

Taken separately, the Euro Zone is projected to grow 1.1 per cent this year, 1.4 per cent in 2015 and 1.5 per cent in 2016, putting behind it two years of contraction.

US GDP, which has expanded for 10 quarters, is projected to grow 2.8 per cent in 2014, up from 1.8 per cent in 2013. That figure could reach 3 per cent by 2016, the World Bank said.

Related Topics
comment COMMENT NOW