The World Bank has significantly revised its global growth forecast, as business spending dwindles and commodity exporters struggle in emerging markets.
The Washington-based banking organisation has slashed its growth forecasts for the gross domestic product (GDP) of the world economy from 2.9% in January to 2.4 per cent for the year – a figure which it damningly describes as an 'insipid' pace that remains level with the rate achieved in 2015.
However, the World Bank does see some light at the end of the tunnel, with the global growth rate predicted to reach an improved 2.8% in 2017.
Nevertheless, several factors were given as reasons for the revised figure. Chief among these was the low oil prices that have caused spending in the US energy sector to plummet. Additionally, the relatively strong dollar and weakening international demand for the country’s products have both contributed to the fall in export growth. Japan was also said to be suffering from a weak exports market, as was Russia and the European area.
As for China, another major power in terms of the global economy, the World Bank left its forecast at the same level stated in January this year — China’s economy is still predicted to grow at a healthy rate of 6.7% throughout 2016. India’s economy is also predicted to grow at the robust rate of 7.6% this year. However, Brazil’s GDP has been forecast to contract by 4%.
Kaushik Basu, the chief economist for the World Bank, said of the current overall worldwide trend:
Eight years since the start of the crisis in the United States in 2008, the global economy remains seemingly trapped in a low-growth equilibrium.
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