World Bank lowers growth forecast
The World Bank has revised down its forecast for economic growth in
the developing world this year - from 5.3% down to 4.8%. It could be the
third consecutive year of growth below 5% for this group of countries.
Bank sources said that developing nations need to make economic
reforms to promote growth. But the new report forecasts that growth in
these countries will accelerate in 2015.
"Disappointing" is the word the Bank used to describe the developing
world's likely performance this year. The organisation's president, Jim
Yong Kim said these growth rates are "far too modest to create the kind
of jobs we need to improve the lives of the poorest 40 percent."
However, there are some optimistic elements to the report. The
downgraded forecast reflects the impact of the Ukraine crisis, bad
weather in the United States and other factors.
Some of these will be temporary and the Bank expects the developing
world to record growth of around 5.5% next year and in 2016, which the
report said is "broadly in line with potential," which means the rate of
growth that they could sustain.
They will be helped by the stronger growth in many rich countries,
notably the US and the euro area.
But Andrew Burns, a senior economist at the Bank and one of the
authors of the report, acknowledged that three consecutive years of
indifferent performance raises questions about whether the developing
world is in for a long period of sub-par performance.
"It's one thing to have one year where one-off factors explain why
growth wasn't quite as strong as you anticipated.
To have three years in a row where growth disappoints, does have to
start begging exactly those kinds of questions," he said.
Even the World Bank's new lower forecast for this year would
constitute a very strong performance in a developed nation.
But poorer countries can grow faster by adopting established
technology and in many cases, putting an increasing working age
population to work.
Burns said these countries should focus on things they can control.
Rather than hope for further help from the developed economies, they
should push ahead with economic reforms of their own.
The report said, "The structural reform agenda needs to be
reinvigorated to sustain rapid income growth".
The report outlined energy and infrastructure, labour markets and the
business climate as areas where some countries would benefit from
reform.
- BBC |