World Bank: Developing Countries Face 'Tough Challenges,' Global Economy Will Grow 2.8% This Year
The World Bank stated in its latest Global Economic Prospects (GEP) report on Wednesday that 2015 is gearing up to be the fourth consecutive year of disappointing economic growth, particularly for emerging economies.
"Developing countries were an engine of global growth following the financial crisis, but now they face a more difficult economic environment," said World Bank Group President Jim Yong Kim. "We'll do all we can to help low- and middle-income countries become more resilient so that they can manage this transition as securely as possible."
The World Bank cited a series of "touch challenges" for emerging economies, such as the looming prospect of higher borrowing costs and the new era of low prices for oil and other key commodities that countries are dependent on for export.
As a result, emerging economies are now projected to experience 4.4 percent growth this year, with a likely rise to 5.2 percent in 2016, and 5.4 percent in 2017.
China has "avoided the potholes skillfully for now" and is easing to a growth rate of 7.1 percent, the Bank's Chief Economist Kaushik Basu added. Brazil has been "less lucky" due to various corruption scandals and is expected to contract by 1.3 percent. On the other hand, India is leading the World Bank's growth chart of major economies with a 7.5 percent expected growth.
Russia's economy is expected to contract by 2.7 percent as the country suffers from oil price declines and sanctions.
The World Bank continued that economic recovery continues to gain momentum in high-income countries. Despite a weak start to 2015, the report projected high-income countries will see 2.0 percent growth in 2015, 2.4 percent in 2016 and 2.2 percent in 2017.
Finally, the World Bank projected the global economy is likely to expand by 2.8 percent in 2015, 3.3 percent in 2016 and 3.2 percent in 2017. However, using 2010 purchasing power parity eights, global growth would be 3.4 percent in 2015, and 4.0 percent in 2016 and 2017.
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