Date
18 December 2017
Improving US economy and low oil prices will not be enough to offset a tepid growth outlook for Europe and some emerging nations, says World Bank chief economist Kaushik Basu. Photo: Bloomberg
Improving US economy and low oil prices will not be enough to offset a tepid growth outlook for Europe and some emerging nations, says World Bank chief economist Kaushik Basu. Photo: Bloomberg

World Bank cuts global growth forecast

The World Bank has cut its global growth forecast for this year and 2016, citing disappointing prospects in the euro zone, Japan and some major emerging economies.

The global economy is now expected to expand 3 percent this year, the bank said in its latest Global Economic Prospects report, scaling back a previous forecast made in June last year for 3.4 percent growth.

As for 2016, world GDP growth is forecast at 3.3 percent, compared with the previous estimate of 3.5 percent, the bank said, according to Reuters. 

“The global economy is at a disconcerting juncture,” World Bank chief economist Kaushik Basu was quoted as saying. “It is as challenging a moment as it gets for economic forecasting.”

The World Bank said strong growth prospects in the United States and Britain separated them from other rich nations, including members of the euro zone and Japan, which continue to face anemic economies and deflation fears.

“The global economy is running on a single engine, … the American one,” Basu said. “This does not make for a rosy outlook for the world.”

Among emerging markets, Brazil and Russia in particular weighed on the bank’s global growth predictions, along with China, which is seeking to move away from an investment-led growth model.

The World Bank expects oil prices to stay low this year, but said the impact could take several years to feed into its growth outlook.

The immediate impact of lower crude prices was limited to a 0.1 percentage point boost to the global outlook this year, the bank said.

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FL/RC

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