2013 global growth forecast at 2.4 percent

Jan. 15, 2013 at 10:45 PM
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WASHINGTON, Jan. 15 (UPI) -- The global economy grew 2.3 percent in 2012 and is expected to grow 2.4 percent in 2013, 3.1 percent in 2014 and 3.3 percent in 2015, the World Bank estimates.

In its latest Global Economic Prospects, the Bank said the worst of the 4-year-old global financial crisis appears over but warned the global economy remains fragile as high-income countries continue to suffer from volatility and slow growth.

For the developing countries, however, the report said prospects remain solid, although growth will be one to two percentage points slower than in the pre-crisis period. The report said to achieve robust growth in the longer term, the countries should focus on productivity-enhancing domestic policies.

In 2012, developing countries saw their slowest growth rates of the past decade with growth estimated at 5.1 percent. This year, growth will be about 5.5 percent, 5.7 percent in 2014 and 5.8 percent in 2015.

The report said growth in high-income countries remains weak, expanding only 1.3 percent in 2012 and is expected to remain the same in 2013, before strengthening to 2 percent in 2014 and 2.3 percent by 2015.

In the euro zone, the Bank said growth is expected to contract by 0.1 percent this year before easing into positive territory in 2014 with a growth of 0.9 percent and 1.4 percent in 2015.

Downside risks to the global economy include a stalling of progress on the Euro Area crisis, debt and fiscal issues in the United States, the possibility of a sharp slowing of investment in China, and a disruption in global oil supplies, the report said. However, it said, the likelihood of these risks have diminished.

"With governments in high-income countries struggling to make fiscal policies more sustainable, developing countries should resist trying to anticipate every fluctuation in developed countries and, instead, ensure that their fiscal and monetary policies are robust and responsive to domestic conditions," said Kaushik Basu, the Bank's chief economist.

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