Dismal Emerging Markets Growth Weighs Down Global Development

Ac­cording to the World Bank’s January 2016 Global Eco­nomic Prospects, weak growth among major emerging markets will weigh on global growth in 2016.

However, economic activity should still pick up modestly to a 2.9 per cent pace from 2.4 per cent growth in 2015, as advanced economies gain speed,

Simultaneous weakness in most major emerging mar­kets is a concern for achiev­ing the goals of poverty re­duction and shared prosperity because those countries have been powerful contributors to global growth for the past decade. Spillovers from ma­jor emerging markets will constrain growth in devel­oping countries and pose a threat to hard-won gains in raising people out of poverty, the report warns.

“More than 40 per cent of the world’s poor live in the developing countries where growth slowed in 2015,” said World Bank Group Presi­dent, Jim Yong Kim.

“Devel­oping countries should focus on building resilience to a weaker economic environ­ment and shielding the most vulnerable. The benefits from reforms to governance and business conditions are potentially large and could help offset the effects of slow growth in larger econo­mies.”

Global economic growth was less than expected in 2015, when falling commod­ity prices, flagging trade and capital flows and episodes of financial volatility sapped economic activity.

Firmer growth ahead will depend on continued momentum in high income countries, the stabilisation of commodity prices and China’s gradual transition towards a more consumption and services-based growth model.