World Bank reduces global growth projection for 2016 to 2.9%

The World Bank has reduced its global growth projection for 2016 to 2.9 per cent, citing weak growth in emerging markets in its January 2016 Global Economic Prospects.

Stronger growth is expected in advanced economies but will only partially offset weak growth in emerging economies, according to World Bank Development Economic Prospects Group Director, Ayhan Kose.

The Bank had projected 3.3 per cent growth in June 2015 and the current growth expected is also in significant contrast with 4.3 projected last October by the International Monetary Fund (IMF).

The growth projection for sub-Saharan Africa was also reduced marginally, from 4.4 per cent last October, to 4.2 per cent.

The Bank says concurrent weak growth in most emerging markets is a major concern for the achievement of its poverty reduction and shared prosperity goals and will pose a threat to “hard-won gains” in poverty reduction given that those countries have been powerful contributors to global growth for the past decade.

“Developing countries should focus on building resilience to a weaker economic environment and shielding the most vulnerable. The benefits from reforms to governance and business conditions are potentially large and could help offset the effects of slow growth in larger economies,” World Bank Group President, Jim Yong Kim was quoted as saying.

Growth is projected to slow further in China, and Russia and Brazil are expected to remain in recession in 2016 while South Asia is expected to be a bright spot and to experience 7.3 per cent growth, led by India with a projected 7.8 growth.

By Emmanuel Odonkor