World Bank Cuts Growth Forecasts as Developed Nations Lose Steam
The World Bank cut its global growth
forecast for this year as austerity measures, high unemployment and low
business confidence weigh on economies in developed nations.
The Washington-based bank on 15 January projected the world
economy will expand 2.4 percent, down from a June
forecast of 3 percent, after growing 2.3 percent in 2012. It halved its forecast for Japan, cut the
U.S. projection by 0.5 percentage point and predicted a second year of
contraction in the euro region. It also lowered projections for emerging
markets led by Brazil, India and Mexico.
“Overall, the global economic environment remains fragile and
prone to further disappointment, although the balance of risks is now less
skewed to the downside than it has been in recent years,” the World Bank said
in its twice-yearly report.
Developed economies failed to gain steam in 2012 even after
measures to stem the European debt crisis helped boost financial markets
around the world. Uncertainties surrounding a U.S. political agreement on
spending cuts and Japan’s diplomatic tensions with China may weigh further on
the global economy just as emerging markets recover from one of their slowest
growth rates of the past decade.