Washington: The World Bank has cut the global growth forecast for 2016 to 2.9 percent, saying that weak growth among major emerging markets will weigh on the global scenario during the year.
In its Global Economic Prospects Report issued on Wednesday, the Washington-based institution expected the world economy to grow 2.9 percent in 2016, 0.4 percentage points lower than the bank’s forecast in June 2015, but higher than the estimated 2.4 percent growth in 2015, Xinhua news agency reported.
Developing economies are forecast to expand by 4.8 percent in 2016, less than expected earlier but up from a post-crisis low of 4.3 percent in the year just ended; advanced economies are expected to grow 2.1 percent this year, also lower than its June forest but up from the estimated 1.6 percent increase in 2015.
“The January Global Economic Prospects tells us that if 2015 was a disappointing year for the world economy, 2016 is the risky year,” said Kaushik Basu, World Bank Group vice president and chief economist, at a media briefing.
“The global economy, in particular the emerging economies could hit a road bump.”
Downside risks, including slower growth, financial stress around the US Federal Reserve tightening cycle, weak commodities prices, and heightened geopolitical tensions, have become increasingly centred on emerging and developing countries, said the report.
The emerging economies seem to be coming apart, with Brazil and Russia expected to remain in recession in 2016, while China and India forecasted to grow around 7 percent.
China is forecasted to grow 6.7 percent in 2016 and 6.5 percent in 2017, lower than the estimated 6.9 percent growth in 2015.
In 2016, the global growth, the emerging market growth in particular, will depend on continued momentum in high income countries, the stabilisation of commodity prices, and China’s gradual transition toward a more consumption and services-based growth model.