World Bank projects steady global growth

The world economy is moving from a post-crisis bounce-back phase of the recovery to slower but still solid growth this year and next, with developing countries contributing almost half of global growth, according to the World Bank’s latest Global Economic Prospects 2011.

The World Bank estimates that global GDP, which expanded by 3.9 per cent in 2010, will slow to 3.3 per cent in 2011, before it reaches 3.6 per cent in 2012. Developing countries are expected to grow seven per cent in 2010, six per cent in 2011 and 6.1 per cent in 2012. They will continue to outstrip growth in high-income countries, which is projected at 2.8 per cent in 2010, 2.4 per cent in 2011 and 2.7 per cent in 2012.

In most developing countries, GDP has regained levels that would have prevailed had there been no boom-bust cycle. While steady growth is projected through 2012, the recovery in several economies in emerging Europe and Central Asia and in some high-income countries is tentative. Without corrective domestic policies, high household debt and unemployment, and weak housing and banking sectors are likely to mute the recovery.

“On the upside, strong developing-country domestic demand growth is leading the world economy, yet persistent financial sector problems in some high-income countries are still a threat to growth and require urgent policy actions,” said Justin Yifu Lin, the World Bank’s chief economist and senior vice president for development economics.