World Bank lowers global economic projection

The World Bank has lowered its global economic growth projection with stable 4. 7 per cent Gross domestic product growth in Sub-Saharan Africa.
“Medium-term prospects for the region remain favorable, with GDP growth projected to remain broadly stable at 4.7 per cent in 2014, before rising moderately to 5.1 per cent in each of 2015 and 2016, supported by firming external demand and investments in natural resources, infrastructure, and agricultural production”, the Bank said in a statement issued in Abuja, yesterday.
It explained that strong domestic demand underpinned GDP growth of 4.7 per cent in 2013, up from 3.7 per cent the previous year.
“Growth is expected to be particularly strong in East Africa, increasingly supported by FDI flows into offshore natural gas resources in Tanzania, and the onset of oil production in Uganda and Kenya.
“Although growth will remain subdued in South Africa, it will pick up modestly in Angola and remain robust in Nigeria, the region’s largest economy”, it said.
The bank observed however, that regional aggregate was depressed by weak 1.9 per cent growth in South Africa due to structural bottlenecks, tense labour relations and low consumer and investor confidence.
According to the global body, “excluding South Africa, average regional GDP growth was 6.0 per cent in 2013. Fiscal and current account deficits widened across the region, reflecting high government spending, falling commodity prices, and strong import growth”.
On a global note, the bank said that developing countries were headed for a year of disappointing growth, as first quarter weakness in 2014 has delayed an expected pick-up in economic activity, according to the World Bank’s Global Economic Prospects, GEP, report, released in Tuesday.
“The Bank has lowered its forecasts for developing countries, now eyeing growth at 4.8 per cent this year, down from its January estimate of 5.3 percent.
Signs point to strengthening in 2015 and 2016 to 5.4 and 5.5 percent, respectively. China is expected to grow by 7.6 percent this year, but this will depend on the success of rebalancing efforts. If a hard landing occurs, the reverberations across Asia would be widely felt”, the report said.
Other factors responsible for the dismal global performance were: bad weather in the US, the crisis in Ukraine, re-balancing in China, political strife in several middle-income economies, slow progress on structural reform, and capacity constraints .
“Growth rates in the developing world remain far too modest to create the kind of jobs we need to improve the lives of the poorest 40 percent,” said World Bank Group President Jim Yong Kim.
He added, “clearly, countries need to move faster and invest more in domestic structural reforms to get broad-based economic growth to levels needed to end extreme poverty in our generation.”
The bank said however, that despite first quarter weakness in the United States, the recovery in high-income countries was gaining momentum, explaining, “these economies are expected to grow by 1.9 percent in 2014, accelerating to 2.4 percent in 2015 and 2.5 percent in 2016. The Euro Area is on target to grow by 1.1 percent this year, while the United States economy, which contracted in the first quarter due to severe weather, is expected to grow by 2.1 percent this year (down from the previous forecast of 2.8 percent).
“The global economy is expected to pick up speed as the year progresses and is projected to expand by 2.8 percent this year, strengthening to 3.4 and 3.5 percent in 2015 and 2016, respectively”.