World Bank maintains 2.7% global growth forecast for 2017

Growth in emerging markets such as India, Brasil, Russia, China, Indonesia and Mexico is expected to surpass the long term average by 2018.

Jim Yong Kim, president of the World Bank Group attends a press conference on the coming 2016 Annual Meetings of International Monetary Fund (IMF) and World Bank Group in Washington D.C., the United States, Oct. 6, 2016. Photo: Xinhua/Yin Bogu/IANS

Key highlights:

Manufacturing and trade are picking up and confidence is improving

The recovery in trade growth in 2017 is supported by stronger demand from major advanced economies

In emerging market and developing economies, growth is expected to accelerate to 4.1 % in 2017 from 3.5 % in 2016

World Bank on Sunday maintained its forecast for global growth in 2017 and 2018 unchanged at 2.7% and 2.9%, respectively, as manufacturing and trade are picking up and confidence is improving.

"A bright spot in the outlook is a recovery in trade growth to 4% (in 2017) after a post-financial crisis low of 2.5% last year," Xinhua quoted the World Bank's Global Economic Prospects (GEP) report as saying.

The recovery in trade growth in 2017 is supported by stronger demand from major advanced economies, increased trade flows to and from China, and a diminished drag from weak demand from commodity exporters, said the World Bank.

TRENDING NOW

Stronger trade also reflected the improved outlook for global growth. According to the forecast, advanced economies are expected to grow 1.9% in 2017, accelerating from the 1.7% growth in 2016, said the World Bank in its flagship Global Economic Prospects (GEP) report released on Sunday.

However, it expected the advanced economic growth to slow to 1.8 % in 2018 and 1.7 % in 2019, in line with its forecasts in January.

ALSO READ: India to grow at 7.2% in 2017-18: World Bank

In emerging market and developing economies, growth is expected to accelerate to 4.1 % in 2017 from 3.5 % in 2016. The growth is projected to pick up pace in 2018 and 2019, and will reach 4.5 % and 4.7 % respectively.

"After a prolonged slowdown, recent acceleration in activity in some of the largest emerging markets is a welcome development for growth in their regions and for the global economy," said Ayhan Kose, director for the GEP program at the World Bank.

Growth among the world's seven largest emerging market economies, namely China, Brazil, India, Indonesia, Mexico, Russia and Turkey, is expected to surpass its long-term average by 2018.

"Recovering activity in these economies should have significant positive effects for growth in other emerging and developing economies and globally," said the report.

World Bank expected Chinese economy to grow 6.5% this year and 6.3% in 2018 and 2019, in line with its forecast in January.

Fiscal support is expected to continue to offset monetary tightening, said the World Bank. It expected government policies will continue to support growth, contain financial risks, and encourage a rebalancing of the economy to more of a focus on consumption.

ALSO READ: Why India could lose its top spot in remittances to China in 2017

The US economy is projected to grow 2.1% this year, 0.1 percentage point lower than the World Bank's forecast in January. However, it raised the forecast for US growth in 2018, up 0.1 percentage point to 2.2%. The growth will again slow to 1.9% in 2019, as it moves closer to potential.

Tax cuts and infrastructure programs could lead to stronger-than-expected growth in the short term, but also to a more rapid increase in interest rates.

TAGS: