Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

World Bank cuts growth outlook as advanced nations drag

Jan 16 2013, 10:26 IST
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A frustratingly slow economic recovery in developed nations is holding back the global economy. (Reuters) A frustratingly slow economic recovery in developed nations is holding back the global economy. (Reuters)
SummaryA frustratingly slow economic recovery in developed nations is holding back the global economy.

already dampened growth," the World Bank said. "Should policymakers fail to agree such measures, a loss of confidence in the currency and an overall increase in market tensions could reduce U.S. and global growth by 2.3 and 1.4 percent respectively."

Burns urged developing countries to "maintain a steady hand on monetary policy" and not to react too forcefully to changes in developed countries. He said developing nations should focus on structural polices and investments to support sustained growth.

The Bank said most developing countries were operating at or near "full capacity" and additional efforts to boost output risk hitting inflation speed bumps.

Meanwhile, the World Bank said a decline in China's unusually high investment rate was not likely to affect global growth over the medium to long term, but warned that a sharp decline could have domestic and global consequences.

World Bank economic simulations suggest that a 10 percentage point deceleration in Chinese investment would cause Chinese GDP growth to slow by about 3 percentage points.

The Bank said a bitter territorial row between China and Japan over islands in the East China Sea has had an impact on Japanese exports to China.

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