The World Bank has cut its forecast for global growth in 2015 and low oil prices through 2016 due to disappointing economic prospects in the euro zone, Japan, Russia and some major emerging economies that offset the benefit of lower oil prices.
The World Bank is forecasting global growth to hit 3% this year, down from a 3.2% prediction in October, which was also revised down from 3.4% in June, 2014, according to its twice-yearly Global Economic Prospects report. Some developing countries are expected to grow at a rate of 4.8% in 2015, compared to 4.4% achieved in 2014.
“The global economy is at a disconcerting juncture, it is as challenging a moment as it gets for economic forecasting.” World Bank chief economist Kaushik Basu told reporters.
Tighter monetary policy in rich countries is likely to lead to for cash leaving emerging markets and could force to further currency depreciation. Soft prices are expected to persist for other commodities as well, which will hurt highly commodity-dependent economies.
World Bank expected the roughly 60% drop in global oil prices since June, 2014 should be a net positive for the world economy, boosting oil-importing countries.
The World Bank warned that, a slowdown in growth from oil-exporting countries could have knock-on ramifications for other emerging and frontier economies.