World Bank sees global economy growing 2.7 percent this year
- Author: Zachary Reyes Jun 05, 2017,
Jun 05, 2017, 9:39
The World Bank's 2017 global growth forecast of 2.7 percent compares to its 2.4 percent estimate for 2016, a figure that increased by a tenth of a percentage point since January. Stabilized commodity prices are allowing Brazil, Russia, Nigeria and other major emerging markets to pull out of a two-year funk.
The World Bank on Sunday maintained its forecast that global growth will improve to 2.7 per cent this year, citing a pick-up in manufacturing and trade, improved market confidence and a recovery in commodity prices.
Significant disruption to China's exports would undermine its growth with large spillovers on the region.
However, it said growth in Ukraine is seen slipping to 2.0 percent from 2.3 percent a year ago.
According to the bank's June 2017 Global Economic Prospects, emerging market and developing economies are forecast to grow 4.1 percent in 2017, up from an eight year low of 3.5% in 2016, while growth in advanced economies is expected to accelerate to 1.9 percent.
The bank projects the woeld economy will grow by 2.7 per cent this year and 2.9 per cent the next, leaving its January forecast unchanged.
Global financing conditions remain favorable and commodity prices have stabilized.
Nevertheless, substantial risks cloud the outlook, the report said.
"A further increase in policy uncertainty from already high levels could dampen confidence and investment and trigger financial market stress", the World Bank said.
"Over the longer term, persistently weak productivity and investment growth could erode long-term growth prospects in emerging market and developing economies that are key to poverty reduction".
Referring to proposed tax cuts and infrastructure spending, as well as potential trade restrictive measures by the Trump administration, the report said, "The possibility of significant additional policy changes presents upside as well as downside risks to the USA growth forecast for 2018-2019".
"The reassuring news is that trade is recovering", said World Bank chief economist Paul Romer.
According to the World Bank's June 2017 Global Economic Prospects growth will happen as worldwide financial institution programs support economic reforms and boost private sector competitiveness.
The bank also said President Donald Trump's tax plan would boost the economy, but likely widen the budget deficit, even taking into account faster growth. "Now is the time for emerging market and developing economies to assess their vulnerabilities and strengthen policy buffers against adverse shocks". Growth in the US and Europe is also picking up as numerous world's most powerful economies finally show signs of escaping the legacies of the global financial crisis.