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World Bank predicts ‘disappointing’ growth for developing world

Global estimates for 2014 reduced because of harsh US winter, crisis in Ukraine

Developing countries are on track for a year of "disappointing” growth, the World Bank said Tuesday, citing the U.S.’s harsh winter, the crisis in Ukraine and political strife in mid-income economies as factors causing it to downgrade its global economic outlook.

In its annual Global Economic Prospects report, the global lender forecasts a sub–5 percent expansion for developing economies for the third straight year. The figure has been revised down from January’s estimate of 5.3 percent growth because of a disappointing first quarter. Likewise, global GDP growth has been moderated to 2.8 percent, from an earlier 3.2 percent prediction.

But despite underlying global weakness, higher-income countries such as the United States are gaining momentum in their recovery from the depths of 2008’s financial crisis. Leading economies are expected to grow by 1.9 percent in 2014 — a lift from 1.3 percent in 2013. The pace of recovery is expected to quicken to 2.4 percent in 2015 and 2.5 percent in 2016, World Bank economists predict.

Meanwhile, Europe as a whole is beset by a number of countries still struggling in the Eurozone, and is set to hit a relatively sluggish 1.1 percent growth in 2014.

For their part, developing nations will see growth at 4.8 percent. But World Bank economists said that having rebounded more quickly from the global economic downturn, developing countries have "already fully recovered," making it harder for them to maintain economic momentum.

"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 percent," World Bank Group President Jim Yong Kim said in a news release. "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."

Overall, there will be global economic growth in 2014, the World Bank predicts, with high-income countries projected to add an additional $6.3 trillion to the global economy.

"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,"Kaushik Basu, Senior Vice President and Chief Economist at the World Bank said in a news release.

But the downwardly revised assessment led to a warning that individual nations would need to do more to protect themselves against the threat of future contractions.

"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," Basu added.

Al Jazeera

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