The World Bank has slashed its 2016 growth forecast by 0.5 per cent to 2.4 per cent and said it is “critically important” for governments to pursue policies that boost economic growth and improve the livelihood of those living in extreme poverty.
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Among major emerging market economies, the World Bank kept China’s growth forecast unchanged at 6.7 percent this year after 2015 growth of 6.9 percent.
“The global economy is fragile”, said World Bank economist Ayhan Kose, who helped produce the forecast.
In its report, the World Bank echoed a warning by the International Monetary Fund in April, that the downside risks to growth were growing as richer countries struggled to free themselves from the debts associated with the financial crisis and poorer states struggled to cope with low commodity prices.
South Africa is forecast to grow at a 0.6 percent rate in 2016, 0.8 of a percentage point more slowly than the January forecast. US manufacturers have been especially hurt by a strong dollar, which has made their goods more expensive overseas.
The Eurozone grew a little faster than expected in the first quarter of this year, the most recent back-and-forth revisions to official GDP statistics have revealed.
Commodity-importing emerging market countries are faring better, but the benefits of lower energy and other goods have been slow to materialize, the bank said in its latest Global Economic Prospects report.
It says there’s to be a further 2.2 per cent growth in 2017 and 2.6 per cent in 2018.
Latin America has been particularly hard hit. On a yearly basis, the currency bloc’s economy grew by 1.7 per cent in the first quarter of 2016, Eurostat said.
The World Bank noted that a protracted slump in advanced economies and a drop in the growth potential of emerging countries may fuel rising protectionism in world trade.
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In the euro area, spending in the private sector accelerated to 0.6 percent in the three months through March from 0.3 percent in the previous period, according to the report.
