WASH­ING­TON

The Pak Banker - - FRONT PAGE -

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.

Fol­low­ing another dis­ap­point­ing year in 2014, de­vel­op­ing coun­tries should see an uptick in growth this year, boosted in part by soft oil prices, a stronger US econ­omy, con­tin­ued low global in­ter­est rates, and re­ced­ing do­mes­tic head­winds in sev­eral large emerg­ing mar­kets, says the World Bank re­port.

After grow­ing by an es­ti­mated 2.6 per­cent in 2014, the global econ­omy is pro­jected to ex­pand by 3 per­cent this year, 3.3 per­cent in 2016 and 3.2 per­cent in 2017, pre­dicts the Bank's twice-yearly flag­ship. De­vel­op­ing coun­tries grew by 4.4 per­cent in 2014 and are ex­pected to edge up to 4.8 per­cent in 2015, strength­en­ing to 5.3 and 5.4 per­cent in 2016 and 2017, re­spec­tively.

"In this un­cer­tain eco­nomic en­vi­ron­ment, de­vel­op­ing coun­tries need to ju­di­ciously de­ploy their re­sources to support so­cial pro­grams with a laser-like fo­cus on the poor and un­der­take struc­tural re­forms that invest in peo­ple," said World Bank Group Pres­i­dent Jim Yong Kim.

"It's also crit­i­cal for coun­tries to re­move any un­nec­es­sary road­blocks for pri­vate sec­tor in­vest­ment. The pri­vate sec­tor is by far the great­est source of jobs and that can lift hun­dreds of mil­lions of peo­ple out of poverty."

The East Asia and Pa­cific re­gion con­tin­ued its grad­ual adjustment to slower but more bal­anced growth. Re­gional growth slipped to 6.9 per­cent in 2014 as a re­sult of pol­icy tight­en­ing and po­lit­i­cal ten­sions that off­set a rise in ex­ports in line with the on­go­ing re­cov­ery in some high­in­come economies. Growth in de­vel­op­ing Europe and Cen­tral Asia is es­ti­mated to have slowed to a lower-than-ex­pected 2.4 per­cent in 2014 as a sput­ter­ing re­cov­ery in the Euro Area and stag­na­tion in Rus­sia posed head­winds. In con­trast, growth in Turkey ex­ceeded ex­pec­ta­tions de­spite slow­ing to 3.1 per­cent. Re­gional growth is ex­pected to re­bound to 3 per­cent in 2015, 3.6 per­cent in 2016 and 4 per­cent in 2017 but with con­sid­er­able di­ver­gence.

Fol­low­ing years of tur­moil, some economies in the Mid­dle East and North Africa ap­pear to be sta­bi­liz­ing, although growth re­mains frag­ile and un­even. Growth in oilimport­ing coun­tries was broadly flat in 2014, while ac­tiv­ity in oil-ex­port­ing coun­tries re­cov­ered slightly after con­tract­ing in 2013. In South Asia, growth rose to an es­ti­mated 5.5 per­cent in 2014 from a 10-year low of 4.9 per­cent in 2013. The up­turn was driven by In­dia, the re­gion's largest econ­omy, which emerged from two years of mod­est growth. Re­gional growth is pro­jected to rise to 6.8 per­cent by 2017, as re­forms ease sup­ply con­straints in In­dia, po­lit­i­cal ten­sions sub­side in Pak­istan, re­mit­tances re­main ro­bust in Bangladesh and Nepal, and de­mand for the re­gion's ex­ports firms. Past ad­just­ments have re­duced vul­ner­a­bil­ity to fi­nan­cial mar­ket vo­latil­ity. Risks are mainly do­mes­tic and of a po­lit­i­cal na­ture. Sus­tain­ing the pace of re­form and main­tain­ing po­lit­i­cal sta­bil­ity are key to main­tain­ing the re­cent growth mo­men­tum. In Sub-Sa­ha­ran Africa, growth picked up only mod­er­ately in 2014 to 4.5 per­cent, re­flect­ing a slow­down in sev­eral of the re­gion's large economies, no­tably South Africa.

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