The World Bank has downgraded its 2016 global growth forecast from 2.9 per cent which it announced in January to 2.4 per cent.
It said in a statement, on Wednesday, July 6, that the decision to reduce the growth forecast was based on sluggish growth in advanced economies, stubbornly low commodity prices, weak global trade, and diminishing capital flows.
According to the latest update of its Global Economic Prospects report, commodity-exporting emerging market and developing economies have struggled to adapt to lower prices for oil and other key commodities, and this accounts for half of the downward revision.
Growth in these economies is projected to advance at a meager 0.4 percent pace this year, a downward revision of 1.2 percentage points from the January outlook.
“This sluggish growth underscores why it is critically important for countries to pursue policies that will boost economic growth and improve the lives of those living in extreme poverty.”
“Economic growth remains the most important driver of poverty reduction, and that’s why we’re very concerned that growth is slowing sharply in commodity-exporting developing countries due to depressed commodity prices,” said World Bank Group President, Mr. Jim Yong Kim.
The bank said that commodity-importing emerging markets and developing economies have been more resilient than exporters, although the benefits of lower prices for energy and other commodities have been slow to materialize.
It added that such economies “are forecast to expand at a 5.8 percent rate in 2016, down modestly from the 5.9 percent pace estimated for 2015, as low energy prices and the modest recovery in advanced economies support economic activity.”
Among major emerging market economies, China is forecast to grow at 6.7 percent in 2016 after 6.9 percent last year. India’s robust economic expansion is expected to hold steady at 7.6 percent, while Brazil and Russia are projected to remain in deeper recessions than forecast in January.
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.
