Trade, manufacturing to boost global growth, says World Bank
WASHINGTON: The World Bank on Sunday maintained its forecast that global growth will improve to 2.7% this year, citing a pickup in manufacturing and trade, improved market confidence and a recovery in commodity prices.
The update of the multilateral development lender’s Global Economic Prospects report marked the first time in several years that its June forecasts were not reduced from those published in January due to rising growth risks.
The World Bank’s 2017 global growth forecast of 2.7 % compares to its 2.4% estimate for 2016, a figure that was increased by a tenth of a percentage point since January.
It said advanced economies were showing signs of improvement, especially Japan and Europe, while the seven largest emerging markets—China, Brazil, Mexico, India, Indonesia, Turkey and Russia—were helping to drive global growth.
“With a fragile but real recovery now under way, countries should seize this moment to undertake institutional and market reforms that can attract private investment to help sustain growth in the long term,” World Bank president Jim Yong Kim said in a statement.
The bank boosted its 2017 growth forecast for Japan by 0.6 percentage points since January to 1.5%; the euro zone’s forecast was increased by 0.2 percentage points to 1.7%.
In both cases, a pickup in exports and unconventional monetary easing are helping to support growth.
The World Bank said US growth also is improving but it shaved 0.1 percentage point off its forecast for 2017 to 2.1 % after weak growth early in the year caused by a pullback in consumer spending it viewed as temporary. It slightly lifted its 2018 US growth forecast to 2.2%. It maintained its forecast that China’s growth would slow to 6.5% from 6.7% in 2016.
But the World Bank warned that new trade restrictions could derail the recovery in trade that is benefiting many advanced and developing economies, citing actions being contemplated by the Trump administration.
Such restrictions could fall disproportionately on China and other Asian economies, the bank said. “Significant disruption to China’s exports will undermine its growth with large spillovers on the region,” the bank said. “Furthermore, trade-restricting measures in the US could trigger retaliatory measures.”