The World Bank cut its global economic growth outlook for 2013, citing slower-than-expected expansion in China, India and Brazil, and a stubborn contraction in Europe, but said the world economy will be less volatile.
The Bank in its two-yearly Global Economic Prospects Report 2013, released in Washington on Wednesday, said that the world economy is set to grow at 2.2 percent, less than the 2.3 percent growth registered last year. The Bank, in its January forecast, had expected the global economy to grow by 2.4 percent.
The report said that the world's economy “is slowly getting back on its feet. However, the recovery remains hesitant and uneven,” and predicted that the global economy will expand 3 percent in 2014 and 3.3 percent in 2015.
The Bank cut its forecast for developing economies and said it expects gross domestic product, GDP, in Europe, reeling under austerity measures and weak consumer sentiment, to contract by 0.6 percent.
It predicted developing countries collectively to expand 5.1 percent, less than the 5.5 percent it estimated in January. The bank cut China’s growth forecast to 7.7 percent from 8.4 percent, Brazil’s economic growth to 2.9 percent from 3.4 percent and India’s growth outlook to 5.7 percent from 6.1 percent, estimated in January.
The Bank said that although the likelihood of another major economic crisis does not exist in high-income countries, the challenges of getting fiscal and monetary policies onto a sustainable path remain.
“Overall, growth in high-income countries is projected to accelerate slowly, with GDP expanding a modest 1.2 percent this year, but firming to 2.0 and 2.3 percent in 2014 and 2015, respectively,” the report added.
The report noted that the austerity measures -- including budget controls on spending -- in European countries have aggravated challenges to economic growth.
“The financial conditions in high-income countries have improved and risks are down, but growth remains subdued, especially in Europe,” the Washington-based lender said in its report.
However, the Bank raised its outlook for the economies of U.S. and Japan, which have benefited from aggressive stimulus measures.
“The recovery is on more solid ground in the United States, where a fairly robust private sector recovery is being held back, but not extinguished, by fiscal tightening. Meanwhile, in Japan, a dramatic relaxation of macroeconomic policy has sparked an uptick in activity, at least over the short term,” the report said.