The World Bank on Wednesday cut its global economic growth forecast for 2016, saying the weak performance of major emerging market economies will tamp activity overall, as will anemic showings from developed countries such as the United States.
Global growth should accelerate to 2.9 per cent this year from 2.4 per cent in 2015, the bank said, but that still represents a downgrade from its June forecast for 3.3 percent growth.
The bank raised particular concern about the flagging performance of top emerging economies.
“Given the size and global economic integration of the largest emerging markets – Brazil, the Russian Federation, India, China, and South Africa, or the so-called BRICS – the simultaneous slowdown underway in all but one of them could have significant spillovers to the rest of the world,” the report said.
The bank forecast the Russian and Brazilian economies would continue to contract in 2016 rather than return to growth as it had estimated in its previous outlook in June.
Real gross domestic product in Russia could shrink at a 0.7 per cent annual pace this year, it said. In June it had forecast 0.7 per cent GDP growth for 2016. The bank estimates the Russian economy shrank by 3.8 per cent in 2015.
In Brazil, GDP is forecast to decline by 2.5 per cent in 2016 compared with an earlier estimate for growth of 1.1 per cent, the World Bank said. The Brazilian economy likely contracted at a 3.7 per cent rate in 2015.
China GDP growth was estimated to slow to 6.7 per cent in 2016 from an estimated 6.9 per cent in 2015. In June the bank had estimated 2016 growth of 7.0 per cent.
The South African economy should grow at a modestly faster rate in 2016 than last year – 1.4 per cent compared with 1.3 per cent – but substantially slower than the 2.1 per cent growth forecast in June.
Of that group, India was the only one expected to see notable improvement in economic performance from 2015 – advancing at a 7.8 per cent rate in 2016 versus 7.3 per cent in 2015. But even there, the bank nipped its 2016 estimate by 0.1 percentage point from its earlier forecast.
The bank also trimmed its outlook for the United States and other developed economies.
The US economy should grow by 2.7 per cent, down from an earlier estimate of 2.8 per cent but up from 2015’s 2.5 per cent.
Estimates for growth in the euro zone were trimmed by the same amount, to 1.7 per cent from 1.8 per cent previously, although that would mark a modest acceleration from 2015’s estimated 1.5 per cent rate.