Date
24 September 2017
The World Bank cut its forecast for China’s growth in 2016 to 6.7 percent from 7 percent in June, and 6.5 percent growth is estimated for next year. Photo: internet
The World Bank cut its forecast for China’s growth in 2016 to 6.7 percent from 7 percent in June, and 6.5 percent growth is estimated for next year. Photo: internet

World Bank slashes global growth forecast to 2.9%

The global economy will sputter along this year as China’s slowdown in growth prolongs a commodity slump and contractions continue in Brazil and Russia, the World Bank said.

The Washington-based development bank cut its forecast for growth in 2016 to 2.9 percent, from its projection in June of 3.3 percent, Bloomberg reported, citing the twice-yearly Global Economic Prospects report released Wednesday.

The world economy grew 2.4 percent last year, less than the 2.8 percent forecast in June and the 2.6 percent expansion in 2014, the bank said.

The deteriorating picture in emerging markets is a big reason for a fifth straight year of global growth below 3 percent.

The World Bank cut its outlook for China’s growth in 2016 to 6.7 percent from 7 percent in June, and 6.5 percent growth is estimated for next year.

Brazil’s economy will shrink 2.5 percent this year, while Russia’s will contract 0.7 percent, it said.

China’s high debt levels are the country’s main short-term risk, the World Bank said, noting that debt to output ratios are larger than in most developing countries.

Still, the government has ample room to use public spending to stimulate growth in the “low-probability scenario” of a faster-than-anticipated slowdown, the bank said.

The bank also trimmed its projection for US growth to 2.7 percent this year from the 2.8 percent forecast in June, citing the dampening effect on exports of the surging US dollar.

Loose monetary policy should continue to sustain “fragile” recoveries in Japan and the euro area, the bank said.

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