The World Bank in its report released on Tuesday, downgraded its 2016 global growth forecast to 2.4% from the 2.9% pace projected in January. It claimed that the world economy is facing sluggish growth, stubbornly low commodity prices, weak global trade, and diminishing capital flows.
As per the report, India's robust economic expansion is expected to hold steady at 7.6%, while China is forecast to grow at 6.7% in 2016 after 6.9% in 2015. Brazil and Russia are projected to remain in deeper recessions than forecast in January. South Africa is forecast to grow at a 0.6 percent rate in 2016, 0.8 of a percentage point more slowly than the January forecast.
Although the global financial crisis is now seven years behind us, the world economy is still struggling to regain momentum [name]Kaushik Basu, Chief Economist at the World Bank[/name]
Growth continues to falter in advanced economies, while there is considerable divergence of performance across emerging market and developing economies, and their overall growth remains below potential, said Basu.
Growth in the East Asia and Pacific region is projected to slow to an unrevised 6.3% rate in 2016. The growth is expected to be supported by rising investment in several large economies (Indonesia, Malaysia, Thailand), and strong consumption supported by low commodity prices (Thailand, the Philippines, Vietnam).
The report also suggested that commodity-exporting emerging market and developing economies have struggled to adapt to lower prices for oil and other key commodities. Growth in these economies is projected to advance at a meager 0.4% pace in 2016, whereas growth in commodity importers has been more resilient.
Flagging growth prospects in emerging markets and developing economies would slow or even reverse their progress in catching up to income levels of advanced economies [name]Ayhan Kose, Development Economic Prospects Group Director said[/name]
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