News Agency of Nigeria (NAN)

World bank predicts 2.7% global growth

Jim Yong Kim: World Bank Boss

By Tiamiyu Arobani

The World Bank says global economic growth will accelerate moderately to 2.7 per cent in 2017 after a post-crisis low global economic growth in 2016.

World Bank Group President Jim Yong Kim said in a report on ‘The World Bank’s Global Economic Prospects January 2017, ‘ projected stronger global economic prospects.

“After years of disappointing global growth, we are encouraged to see stronger economic prospects on the horizon,” he said.

“Now is the time to take advantage of this momentum and increase investments in infrastructure and people.

“This is vital to accelerating the sustainable and inclusive economic growth required to end extreme poverty,” he added.

Growth is projected to ease to 6.2 per cent in East Asia and the Pacific, pick up to 2.4 per cent in Europe and Central Asia, return to positive growth and expand by 1.2 per cent in Latin America and Caribbean.

Economy is projected to recover modestly to a 3.1 per cent in Middle East and North Africa, pick up modestly to 7.1 per cent in South Asia, and to 2.9 per cent in Sub-Saharan Africa.

The World Bank’s Global Economic Prospects January 2017 said that growth in advanced economies is expected to edge up to 1.8 per cent in 2017.

According to World Bank Development Economics Prospects Director Ayhan Kose, growth in the U.S. is expected to pick up to 2.2 per cent, as manufacturing and investment growth gain traction after a weak 2016.

Kose said fiscal stimulus in major economies, particularly in the U.S., could generate faster domestic and global growth than projected, although rising trade protection could have adverse effects.

However, due to the “outsize role the U.S. plays in the world economy, changes in policy direction may have global ripple effects”, he said.

The forecast stated that growth in emerging market and developing economies as a whole should pick up to 4.2 per cent this year from 3.4 per cent in the year just ended amid modestly rising commodity prices.

Nevertheless, the outlook is clouded by uncertainty about policy direction in major economies.

A protracted period of uncertainty could prolong the slow growth in investment that is holding back low, middle, and high income countries.

In emerging market and developing economies, which account for one-third of global gross domestic product and about three-quarters of the world’s population and the world’s poor, investment growth fell to 3.4 per cent in 2015 from 10 per cent on average in 2010, and likely declined another half percentage point last year.

Slowing investment growth was partly a correction from high pre-crisis levels, but also reflected obstacles to growth that emerging and developing economies have faced.

The obstacles include low oil prices for oil exporters, slowing foreign direct investment for commodity importers, and more broadly, private debt burdens and political risk.

Commodity-exporting emerging market and developing economies are expected to expand by 2.3 per cent in 2017 after an almost negligible 0.3 per cent in 2016, as commodity prices gradually recover and as Russia and Brazil resume growing after recessions.

In contrast, commodity-importing emerging market and developing economies should grow at 5.6 per cent this year, unchanged from 2016.

China is projected to continue an orderly growth slowdown to a 6.5 per cent rate, according to the forecast.

“However, overall prospects for emerging market and developing economies are dampened by tepid international trade, subdued investment, and weak productivity growth,” the report stated. (