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Developing world prospects solid, but bumpy road ahead

January 16, 2013

Developing world prospects solid, but bumpy road ahead

Source: World Bank

Four years after the onset of the global financial crisis, the worst appears to be over.

However, the global economy remains fragile, as high-income countries continue to suffer from volatility and slow growth, says the World Bank’s latest Global Economic Prospects, issued today.

Despite slow growth in high-income countries, prospects for the developing world remain solid (albeit between 1 and 2 percentage points slower than in the pre-crisis period). In order to regain those earlier faster growth rates, developing countries will need to focus on productivity-enhancing domestic policies, to assure robust growth in the long term.

The World Bank estimates global GDP grew 2.3 percent in 2012. Growth is expected to remain broadly unchanged at 2.4 percent growth in 2013, before gradually strengthening to 3.1 percent in 2014 and 3.3 percent in 2015.

Developing countries recorded among their slowest economic growth rates of the past decade in 2012, with GDP estimated to have grown 5.1 percent. Growth for developing countries is projected to expand by 5.5 percent in 2013, strengthening to 5.7 percent and 5.8 percent in 2014 and 2015, respectively.

Growth in high-income countries remains weak, with their GDP expanding only 1.3 percent in 2012 and expected to remain slow at an identical 1.3 percent in 2013. Growth should gradually firm to 2 percent in 2014 and 2.3 percent by 2015. In the Euro Area, growth is now projected to only return to positive territory in 2014, with GDP expected to contract by 0.1 percent in 2013, before edging up to 0.9 percent in 2014 and 1.4 percent in 2015.

Global trade of goods and services, which grew only 3.5 percent in 2012, is expected to accelerate, expanding by 6 percent in 2013 and 7 percent by 2015.

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