World Bank forecasts higher growth

By HeavyLiftPFI2017-01-12T00:00:00+00:00

January 12 - The world economy is expected to expand 2.7 percent this year, recovering from a post-crisis low in 2016, thanks to rising commodity prices and Donald Trump's stimulus, the World Bank said in its latest Global Economics Prospects report.

However, this growth could be hit by a significant slowdown in investment in emerging markets and political uncertainty in major economies, including the USA.

In the report, the World Bank said it expects a moderate recovery for 2017, with receding obstacles to activity in commodity-exporting emerging markets and developing economies. It noted that weak investment is weighing on medium-term prospects across many emerging markets and developing economies. Although fiscal stimulus in major economies, if implemented, may boost global growth above expectations, risks to growth forecasts remain tilted to the downside.

Global growth in 2016 is estimated at a post-crisis low of 2.3 percent and is projected to rise to 2.7 percent in 2017.

Downside risks to global growth include increasing policy uncertainty in major advanced economies and some emerging market and developing economies (EMDE), financial market disruptions, and weakening potential growth.

EMDEs grew by an estimated 3.4 percent in 2016, slightly below June projections. Among commodity exporters, output expanded an estimated 0.3 percent, as some improvement in Brazil and Russia and a modest increase in commodity prices was offset by further weakness in other exporters. In commodity importers, growth in 2016 is estimated at 5.6 percent, reflecting resilient domestic demand and generally accommodative macroeconomic policies.

Going forward, EMDE regions with substantial numbers of commodity importers are expected to experience solid growth, while the outlooks for regions with large number of commodity exporters are more heterogeneous.

Overall, EMDE growth is projected to pick up to 4.2 percent in 2017 and to an average of 4.7 percent in 2018-19, mainly on a recovery in commodity exporters supported by a gradual increase in commodity prices.

However, a number of factors-including advanced economy policy uncertainty and slowing productivity growth-are expected to weigh on the medium and long-term EMDE outlook.

The full report can be seen here: http://www.worldbank.org/en/publication/global-economic-prospects

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