WB Cuts Global Growth Outlook
World Economy

WB Cuts Global Growth Outlook

The World Bank cut its forecast for global growth this year, as an improving US economy and low fuel prices fail to offset disappointing results from Europe to China.
The world economy will expand 3 percent in 2015, down from a projection of 3.4 percent in June, according to the lender’s semiannual Global Economic Prospects report, released today in Washington, Bloomberg said.
The report adds to signs of a growing disparity between the US and other major economies while tempering any optimism that a plunge in oil prices will boost output. Risks to the global recovery are “significant and tilted to the downside,” with dangers including a spike in financial volatility, intensifying geopolitical tensions and prolonged stagnation in the euro region or Japan.
“The global economy today is much larger than what it used to be, so it’s a case of a larger train being pulled by a single engine, the American one,” World Bank Chief Economist Kaushik Basu told reporters on a conference call. “This does not make for a rosy outlook for the world.”

The World Bank has also downgraded its expectations for Russia’s economy, saying that the country’s gross domestic product (GDP) is expected to decline by 2.9%.
The bank said in the Global Economic Prospects (GEP) report said that sustained low oil prices will weaken economic activity in major exporting countries, like Russia, while oil importing countries, including China, will be the big winners.
Russia’s economy will get “barely back into positive territory in 2016 with growth expected at 0.1%,” the report says. The World Bank earlier projected Russia’s GDP to contract by 0.7% in 2015 and increase by 0.3% in 2016.

US Growth
The Washington-based lender upgraded its forecast for US growth to 3.2 percent this year from a 3 percent estimate given in June. It reduced its projections for the euro area and Japan, citing lingering effects from the financial crisis and “structural bottlenecks.” It also cut its forecast for China, saying the world’s second-biggest economy is undergoing a “managed slowdown.”

IMF Forecast
The World Bank is the latest institution to lower its global estimate amid a recovery that has repeatedly disappointed policy makers. The International Monetary Fund trimmed its 2015 outlook in October to 3.8 percent, citing weak demand and residual debt from the financial crisis. The IMF plans to update its global forecast next week.

Euro Area
The 19-nation euro area is projected by the World Bank to grow 1.1 percent in 2015, down from a June estimate of 1.8 percent. China will expand 7.1 percent, down from the 7.2 percent pace the bank projected in October and a 7.5 percent estimate in June. Japan will expand at a 1.2 percent clip, down from the 1.3 percent projected in June, according to the bank.
It also cut its forecast for global growth in 2016 to 3.3 percent from 3.5 percent.
The bank sees average oil prices falling 32 percent this year, a decline that’s historically associated with a boost to global GDP of about 0.5 percent. Yet the impact on growth may be smaller in 2015 and 2016 because of other headwinds including weak confidence that encourages saving rather than spending, and a “significant” income shift from oil-producing countries to those that are net consumers, the World Bank said.
“It is as challenging a moment as it gets for economic forecasting,” Basu said. “While lower oil prices are good overall for the global economy, the process of falling creates uncertainty, winners and losers.”


Short URL : http://goo.gl/qpyH5W

You can also read ...

Mexico Hosts 39 Million Tourists, Earns $21 Billion
Mexico saw record revenues from international tourism in 2017...
US has accused ABLV of money laundering and breaching  sanctions on North Korea.
The European Central Bank said Saturday it has determined that...
S&P Ups Russia to Investment Grade
Russia received a long-awaited upgrade to its sovereign rating...
Debt to GDP ratios across the OECD averaged 73% last year and its members are set to borrow $14.67 trillion from the markets this year.
The world economy is at risk from a rising tide of government...
Peru Deficit Narrows
Peru had a current account deficit of 1.3% of the gross...
China’s Geely Buys $9 Billion Daimler Stake
The founder of Zhejiang Geely Holding Group Co. has...
Thorny issues such as content rules for  cars remain unsolved.
It’s looking increasingly likely Nafta talks will extend...
Manafort Indictment Spells Trouble for Bankers
Recently filed federal charges against President Donald Trump’...