The World Bank expects global growth to remain flat in 2013 and has called on developing countries to safeguard their economies.
The organisation estimates that global GDP grew by 2.3% in 2012, down from its 2.5% estimate last June, and has forecast a 2.4% expansion this year.
‘The economic recovery remains fragile and uncertain, clouding the prospect for rapid improvement and a return to more robust economic growth, said World Bank president Jim Yong Kim. ‘Developing countries have remained remarkably resilient this far but we can’t wait for a return to growth in the high income countries, so we have to continue to support developing countries in making investments in infrastructure, in health and in education. This will set the stage for the stronger growth that we know that they can achieve in the future.’
Eurozone uncertainty weighed heavily on the global economy last year with international capital flows into developing economies falling by 30% in the second quarter. Although investment has recovered, weakness in developed nations continue to hold back the emerging world Kim said.
He stressed that the key downside risks remain a deterioration of the outlook in the eurozone, debt and fiscal issues in the US, a hard landing in China and a disruption in global oil supplies, but says possibilities have diminished compared to this time last year.
‘The weakness in high income countries is dampening developing-country growth, but strong domestic demand and growing South-South economic linkages have underpinned developing country resilience – to the point that, for the second year in a row, developing countries were responsible for more than half of global growth in 2012,’ said Hans Timmer, a director of the World Bank’s Development Prospects Group.