Talk that now is the time to start a move back into emerging markets after the long sell-off is building, however the Washington-based Bank said developing countries are heading for a year of ‘disappointing growth’. This is due to weakness during the first quarter delaying the expected pick-up in economic figures.
There are have been a number of factors in this, the Bank said. These include bad weather in the US, the crisis in Ukraine and rebalancing in China. Other issues of concern include ‘political strife’ in the middle-income economies and slow progress on structural reform across the developing world.
All this has added up to a less rosy picture than expected, with 4.8% growth across developing countries as a whole projected for 2014, down from 5.3% the Bank said.
The Bank does however expect improvement to come over the next two years and is expecting growth across the developing world of 5.4% next year and 5.5% in 2016.
"Growth rates in the developing world remain far too modest to create the kind of jobs we need to improve the lives of the poorest 40%,” said World Bank president Jim Yong Kim. “Clearly, countries need to move faster and invest more in domestic structural reforms to get broad-based economic growth to levels needed to end extreme poverty in our generation,” he added.
The Bank also sounded a note of caution on the key economy of China in its report. Growth is expected to hit 7.6% this year however reaching this will only be possible if rebalancing efforts underway are successful. Any major problems with this could see the world’s most populated country miss growth targets, the Bank warned.
The Bank’s outlook for the United States and other high-income countries is much brighter and economic recovery in the developed world is ‘gaining momentum’. Developed economies as a whole are projected to grow by 1.9% in 2014, 2.4% in 2015 and 2.5% in 2016.
The weak point in the developed world will continue to be the Euro area with the Bank projecting growth of just 1.1% this year.
The global economy as a whole is likely to improve its growth rate as the year progresses and is on track to expand by 2.8% this year, 3.4% in 2015 and 3.5% and 2016, the Bank said.
