With stagnant Europe and Japan, World Bank cuts 2015 forecast for global economic growth - InfoNews

Current Conditions

-3.7°C

With stagnant Europe and Japan, World Bank cuts 2015 forecast for global economic growth

January 13, 2015 - 1:43 PM

WASHINGTON - The World Bank, citing stagnation in Europe and Japan and a slowdown in China, downgraded its forecast for the global economy this year. It also reported that world economic growth came in below expectations in 2014.

The bank predicts the world economy will expand 3 per cent this year, up from 2.6 per cent in 2014. Last June, World Bank economists had forecast 3.4 per cent global economic growth this year and 2.8 per cent last year.

"The recovery has been sputtering in the Euro Area and Japan as legacies of the financial crisis linger ... China, meanwhile, is undergoing a carefully managed slowdown," the bank said Tuesday in the first of its twice-yearly Global Economic Prospects reports for 2015.

Plunging oil prices and stronger growth in the United States are expected to help boost global growth in 2015.

The bank expects the U.S. economy to grow 3.2 per cent this year, up from 2.4 per cent in 2014.

Growth among the 19 countries that use the euro currency is expected to pick up modestly — to 1.1 per cent in 2015 from 0.8 per cent last year. Likewise, the Japanese economy is expected to rebound to 1.2 per cent growth this year from 0.2 per cent in 2014.

The bank expects China's economy to expand 7.1 per cent this year, down from 7.4 per cent in 2014. The slowdown reflects in part the Chinese government's effort to rein in excessive lending and wasteful investment.

Overall, the bank expects high-income countries to grow 2.2 per cent this year, up from 1.8 per cent in 2014. Developing countries will grow 4.8 per cent, an improvement from 4.4 per cent in 2014.

The bank sees risks that could spoil its forecast. There's potential for a financial crisis if investors pull money out of emerging markets to take advantage of rising interest rates and improving economic prospects in the United States. That could cause emerging market currencies to plummet and squeeze companies that borrowed in U.S. dollars — a partial replay of the Asian financial crisis of 1997-1998.

Conflict in Ukraine and the Middle East could disrupt economic growth. The Chinese economy could tumble into a "disorderly slowdown." Sub-Saharan African economies, expected to grow a healthy 4.6 per cent in 2015, could be devastated instead if the Ebola outbreak isn't contained.

News from © The Associated Press, 2015
The Associated Press

  • Popular vernon News
  • Comments
  • New mountain highway proposed between Red Deer and Kamloops
    An Alberta development group is pitching the idea of a new highway linking central Alberta to B.C. cutting through the mountains and a section of Banff National Park. The Central Alberta Eco
  • Kamloops firefighter back at work after co-workers saved his life
    Four months after his co-workers saved his life, a Kamloops firefighter is back at work. Mike Silva has been working with Kamloops Fire Rescue for 15 years and was enjoying some time off in
  • Pier 1 closing all of its stores in Canada
    Pier 1 Imports, Inc. announced today that it has entered into bankruptcy protection and is pursuing a sale. The retailer  commenced voluntary Chapter 11 proceedings in the U.S. Bankrupt
  • West Kelowna's Bull Mountain glistens for its close-up
    It’s not a secret that West Kelowna’s family ski hill is getting infused with new life. Bull Mountain Adventure Park is being built on the remnants of Crystal Mountain Resort, an
  • Vernon family captures mesmerizing melting ice
    A Vernon family was on their way home from Kelowna when they made a pit stop after noticing a beautiful scene along Wood Lake. Matthew Royal and his daughters noticed how “cool”
View Site in: Desktop | Mobile