World Bank cuts Africa’s growth forecast to 4.8%
By Kusoro Jeremiah
World Bank yesterday lowered its growth forecasts for developing countries to 4.8 per cent this year from an earlier projection of 5.3 per cent in January.
It however said there are prospects for strengthening the forecast in 2015 and 2016 to 5.4 and 5.5 per cent respectively.
The Breton Woods institution, in its latest Global Economic Prospects (GEP) report said developing countries were headed towards a “year of disappointing growth” following first quarter weakness in 2014 which had limited expectations for a pick-up in economic activity.
World Bank Group President, Jim Yong Kim said:”Growth rates in the developing world remain far too modest to create the kind of jobs we need to improve the lives of the poorest 40 per cent.
“Clearly, countries need to move faster and invest more in domestic structural reforms to get broad-based economic growth to levels needed to end extreme poverty in our generation.”
The Bank had predicted a 5.3 and 5.5 per cent Gross Domestic Product (GDP) growth in Africa for 2014 and 2015, respectively. It had noted that growth in the region was expected to reach 4.9 per cent this year.
However, it said global growth is targeted at 3.4, 4.0 and 4.2 per cent in 2014, 2015 and 2016, respectively adding that “high-income economies will contribute about half of global growth in 2015 and 2016, compared with less than 40 percent in 2013.”
The report further stated that bad weather in the US, the crisis in Ukraine, rebalancing in China, political strife in several middle-income economies, slow progress on structural reform, and capacity constraints all contribute to a third straight year of below five percent growth for the developing countries as a whole.
It said China’s projected growth by 7.6 percent this year would depend on the success of its rebalancing efforts adding “If a hard landing occurs, the reverberations across Asia would be widely felt.
Senior Vice President and Chief Economist at the World Bank, Kaushik Basu said:”The financial health of economies has improved. With the exception of China and Russia, stock markets have done well in emerging economies, notably, India and Indonesia.
“But we are not totally out of the woods yet. A gradual tightening of fiscal policy and structural reforms are desirable to restore fiscal space depleted by the 2008 financial crisis. In brief, now is the time to prepare for the next crisis.”
The report said: “Despite first quarter weakness in the United States, the recovery in high-income
countries is gaining momentum. These economies are expected to grow by 1.9 percent in 2014, accelerating to 2.4 percent in 2015 and 2.5 percent in 2016.
The Euro Area is on target to grow by 1.1 per cent this year, while the United States economy, which contracted in the first quarter due to severe weather, is expected to grow by 2.1 percent this year (down from the previous forecast of 2.8 percent)”
Continuing, it noted:”The global economy is expected to pick up speed as the year progresses and is projected to expand by 2.8 percent this year, strengthening to 3.4 and 3.5 percent in 2015 and 2016, respectively”.
