The World Bank is lowering its global growth forecast for 2016 to 2.4 percent from 2.9 percent projected in January, blaming sluggish growth in advanced and emerging markets, low commodity prices and diminishing capital flows.
According to the latest update of its Global Economic Prospects, the World Bank estimated 6.7 percent growth for China compared to 6.9 percent last year, while India is expected to maintain its steady growth at 7.5 percent.
Economies in Brazil and Russia were, however, projected to remain in deeper recessions than forecast in January, a World Bank statement said. The global economy was facing mounting risks, including a further slowdown in major emerging markets.
“Commodity-exporting emerging market and developing economies have struggled to adapt to lower prices for oil and other key commodities, and this accounts for 40% of the downward revision,” the World Bank said.
Growth in these economies is projected to advance at a meager 0.4% pace this year, a downward revision of 1.2 percentage points from the January outlook.
“This sluggish growth underscores why it’s critically important for countries to pursue policies that will boost economic growth and improve the lives of those living in extreme poverty,” said World Bank Group President Jim Yong Kim.
“Economic growth remains the most important driver of poverty reduction, and that’s why we’re very concerned that growth is slowing sharply in commodity-exporting developing countries due to depressed commodity prices.”
Commodity-importing emerging markets and developing economies have been more resilient than exporters, although the benefits of lower prices for energy and other commodities have been slow to materialize.
These economies are forecast to expand at a 5.8% rate in 2016, down modestly from the 5.9% pace estimated for 2015, as low energy prices and the modest recovery in advanced economies support economic activity.
Growth in the East Asia and Pacific region is projected to slow to an unrevised 6.3% rate in 2016, with China’s expansion expected to ease to 6.7%, as projected in January. The region excluding China is projected to growth at 4.8% in 2016, unchanged from 2015.
Growth in South Asia is forecast to accelerate to 7.1% in 2016, despite weaker-than-expected growth in advanced economies, which has dampened export growth in the region.