World Bank cuts global growth forecast to 'new normal'
The bank expects the economy to grow slightly below last year's
2.3 percent. In its last forecast in January, the World Bank
estimated the world economy would expand 2.4 percent this year.
In 2014 the growth rate is expected to accelerate to 3 percent
and reach 3.3 percent in 2015.
"Growth is not slower because of inadequate demand but rather
because, in our view, the very strong growth we saw in the
pre-crisis period was due to that bubble phenomenon,” the
lead author of the report Andrew Burns explains.
Countries like Brazil, India, Russia and China will grow at their
slowest pace in a decade, at 5.1 percent as commodities prices
moderate and countries rebalance their economies, the World Bank
said. Growth in these countries should slowly pick up in the
future, to 5.6 percent next year and 5.7 percent in 2015,
according to the report. The bank warned that large developing
economies, which have driven global growth in recent years, will
not experience the same boom as they did before the global
financial crisis and will have to focus on structural reforms to
"What we're seeing now is more in line with the underlying
growth potential," Andrew Burns says. "Therefore, this is a case
of moving towards the new normal of the post crisis."
China's economy that was booming at an annual rate of 10 percent
before the crisis is now expected to grow 7.7 percent in 2013,
down from its earlier projection of 8.4 percent, according to the
report. Economists are abandoning their rosy recovery forecasts
and bracing for what could be the country's slowest growth rate
in 23 years, Reuters reports. China's rapid expansion would
moderate as its economy rebalanced away from investment-led
growth to focus more on consumption, Reuters quotes Andrew Burns.
The World Bank is warning developing nations to watch out for the
side effects from the massive monetary expansion in advanced
nations like the US and Japan.
Among major risks to the global economy are the recession in the
Eurozone, and fiscal uncertainty in the US, the World Bank
The World Bank has slashed Russia GDP growth forecast in 2013 to
2.3 percent from 3.6 percent.