World Bank bearish on global outlook
Growth forecasts lowered as debt crisis in euro zone and fiscal uncertainties in US contribute to weak investment and industrial activity
Warning that the global economy continues to be fragile, the World Bank yesterday sharply cut the growth outlook for this year.
The multilateral bank forecast global gross domestic product this year would edge up to 2.4 per cent from 2.3 per cent in 2012, revised down from the 3 per cent growth it predicted in June.
European economies' failure to gain momentum despite repeated measures to boost the financial markets and the fiscal uncertainties in the United States had contributed to weak investment and industrial activity, resulting in persistently slow growth that had held the global economy back, it said.
Growth in rich countries is forecast at 1.3 per cent, down from the 1.9 per cent predicted earlier, and developing countries are expected to grow 5.5 per cent rather than 5.9 per cent.
"The global economic environment remains fragile and prone to further disappointment, although the balance of risks is now less skewed to the downside," the World Bank said in its twice-yearly report.
The US is now forecast to grow 1.9 per cent. The euro zone will contract 0.1 per cent, compared with 0.7 per cent growth seven months ago. Japan will expand 0.8 per cent, slower than the 1.5 per cent pace in June.
