World Bank cuts 2016 forecast for global economy to just 2.9 per cent

WASHINGTON - The World Bank has cut its forecast for global growth this year given weakness in the developing world.

See Full Article

The aid agency said Wednesday that it expects the world economy to expand 2.9 per cent in 2016, down from the forecast of 3.3 per cent it made in June. The global economy grew 2.4 per cent in 2015.

Several big developing economies -- including Brazil and China -- are slowing or shrinking. Their troubles have disproportionately hurt their smaller trading partners, which have also been squeezed by depressed commodity prices.

The World Bank expects developing countries to collectively grow 4.8 per cent, up from a six-year low 4.3 per cent in 2015. China, the world's second-biggest economy, is expected to register 6.7 per cent growth, down from 6.9 per cent in 2015 and the slowest pace since 1990.

The economic prospects of advanced economies appear to be brightening as the developing world struggles. The World Bank expects the U.S. economy to grow 2.7 per cent this year, up from 2.5 per cent in 2015 and the fastest pace since 2006.

The agency foresees the 19-country eurozone economy expanding 1.7 per cent, up from 1.5 in 2015 and fastest since 2011. And it expects the Japanese economy, lifted by the Bank of Japan's easy-money policies, to grow 1.3 per cent, up from 0.8 per cent in 2015.

Since the 2008 financial crisis and the Great Recession, the World Bank, the International Monetary Fund and others have frequently overestimated the strength of the world economy and have later had to downgrade their initial predictions.

The World Bank's 2016 forecast involves two key optimistic assumptions for global growth: That commodity prices will stabilize after plummeting in 2015. And that the Chinese government will keep growth in the world's second-biggest economy from imploding as it manages a difficult transition away from fast but unsustainable growth based on excessive investment in factories and real estate.

"China is going to continue slowing in an orderly fashion," says World Bank economist Ayhan Kose, who helped put together the forecast.

The agency also assumes that the Federal Reserve's interest-rate hike last month -- and any further rate hikes -- won't damage the U.S. economy or cause much turmoil in financial markets.

Its outlook differs from region to region and country to country.

Latin America, forecast to grow just 0.1 per cent this year, has been especially hard hit by falling commodity prices. Brazil's economy, once an emerging powerhouse, is forecast to drop 2.5 per cent this year after shrinking 3.7 per cent in 2015.

The Russian economy, squeezed by low oil prices and international sanctions, is expected to slide 0.7 per cent this year on top of a 3.8 per cent drop last year.

The Iranian economy, which is getting relief from economic sanctions after reaching a nuclear deal with the Obama administration, is forecast to surge 5.8 per cent this year, up from 1.9 per cent in 2015.

The oil-importing countries of South Asia are expected to benefit from lower energy prices. The World Bank predicts that India will grow 7.8 per cent, Pakistan 5.5 per cent and Bangladesh 6.7 per cent.

The countries of sub-Saharan Africa are expected to grow 4.2 per cent, up from 3.4 per cent last year. But the World Bank expects wide disparities among African countries. South Africa, for instance, is forecast to grow just 1.4 per cent, while Ethiopia is expected to expand 10.2 per cent and Rwanda 7.6 per cent.



Advertisements

Latest Economic News

  • Ex-Fiat Chrysler exec pleads guilty in union payoff scheme

    Economic CTV News
    Al Iacobelli, former Vice President Employee Relations at Chrysler Group LLC is seen on the right, answering a media question, at a news conference on July 25, 2011. (AP / Paul Sancya) Source
  • Netflix shares jump after earnings show subscriber growth

    Economic CBC News
    Netflix Inc added more global subscribers than expected in the fourth quarter, as the video streaming service provider kept viewers hooked with critically acclaimed shows such as "The Crown" and "Stranger Things," sending its shares up 7 percent in aftermarket trading to a record. Source
  • Media mogul Rupert Murdoch says Facebook should pay for news

    Economic CBC News
    Media mogul Rupert Murdoch says Facebook should pay fees to "trusted" news producers for their content. Facebook said last week that it will boost news sources that its users rank as most trustworthy , while shrinking the percentage of news posts overall in users' news feeds. Source
  • Quebec judge refuses to end trial for former Amaya CEO and others

    Economic CTV News
    MONTREAL -- A Quebec judge has refused to stay insider trading charges against former Amaya CEO David Baazov and other accused. Provincial court Judge Salvatore Mascia rejected defence motions to end the case because of the length of time it has taken to reach the trial stage and late filing of prosecution documents. Source
  • Quebec judge rejects Jordan motion to end trial of ex-Amaya CEO and others

    Economic CTV News
    MONTREAL -- An insider trading trial against former Amaya CEO David Baazov and his co-accused is set to get underway in the coming weeks after a Quebec judge rejected a defence motion to stay the process over unreasonable delays. Source
  • Corporate Canada urged to up its game in promoting NAFTA with Americans

    Economic CTV News
    OTTAWA -- For all of Canada's efforts to promote the North American Free Trade Agreement on U.S. soil, there are concerns one important voice from the north has been a little quieter than the rest: Canadian business. Source
  • Sears employees, pensioners alarmed by insolvency fees, lawyers say

    Economic CTV News
    TORONTO -- Sears Canada pensioners, former and current employees say the nearly $52.9 million in professional fees paid by the shuttered retailer during the insolvency process is alarming and concerning, their lawyers told an Ontario court today, noting they reserve the right to challenge them at a later date. Source
  • Apple CEO Tim Cook discusses Malala Fund in exclusive interview

    Economic CTV News
    In a Canadian first, Apple CEO Tim Cook sits down with CTV’s Your Morning for an exclusive interview to discuss his company’s new partnership with Nobel Peace Prize winner Malala Yousafzai. The interview is slated to air on Tuesday morning. Source
  • Ontario landlords call for right to immediately ban pot in rentals despite tenant laws

    Economic CTV News
    TORONTO -- Ontario landlords want the right to immediately ban the use of pot in rental properties when recreational weed is legalized this summer, arguing they should be allowed to change tenants' existing leases to stop the drug from being consumed in their units. Source
  • Rogers Media cuts ties with Vice Canada, pulls Viceland channel off the air

    Economic CTV News
    TORONTO - Rogers Media and Vice Canada have announced the end of their three-year-old partnership, with TV channel Viceland slated to cease broadcasting on Rogers cable as of March 31 and Rogers giving up its interest in Vice StuRogers Media cuts ties with Vice Canada, pulls Viceland channel off the airdio Canada. Source