Global economy picking up steam: World Bank
15 Jan 2014
The global economy was slowly picking up steam, led by advanced economies that seemed to be turning the corner after five years of financial crises and recession as also continued good performance by China, the World Bank said yesterday AP reported.
However, it said growth prospects remained vulnerable to rising interest rates and potential volatility in capital flows as the US Federal Reserve eased up on the extraordinary stimulus it had been providing to the US economy, the world's largest.
According to the bank's twice-yearly Global Economics Prospects report, global growth was expected to firm up from 2.4 per cent in 2013 to 3.2 per cent this year and 3.4 per cent in 2015.
According to the report, the momentum that countries such as the US and Japan were building up should support stronger growth in the developing countries.
Kaushik Basu, the chief economist of the bank said, the outlook for the global economy was uneventful.
''It's a strange world we live in that news that an uneventful economy ahead of us is meant to be good news,'' Basu said at a news conference at the bank's Washington headquarters. He added, it was not surprising though, that it was the case after years of economic turmoil.
However, global growth outlook would be sensitive to headwinds from rising global interest rates and potential volatility in capital flows, with the US Federal Reserve starting withdrawing its massive monetary stimulus, the report noted.
Growth in developing countries would perk up from 4.8 per cent in 2013 to a less-than-expected 5.3 per cent this year, in a reflection of the cooling off of the unsustainable turbo-charged pre-crisis growth.
The drag on growth from fiscal consolidation and policy uncertainty would ease for high income economies, helping boost economic growth from 1.3 per cent in 2013 to 2.2 per cent this year.
Among them, the recovery was most advanced in the US, as it was projected to grow by 2.8 per cent this year following 10 quarters of expansion.
Following two years of contraction, the eurozone was projected to grow by 1.1 per cent this year.
Xinhua quoted Andrew Burns, acting director of the development prospects group and lead author of the report, as saying the strengthening recovery in high-income countries was very welcome, but it brought with it risks of disruption as monetary policy tightened.
