(Trinidad Express) – Developing countries are headed for a year of disappointing growth, as first quarter weakness in 2014 has delayed an expected pick-up in economic activity, the World Bank’s Global Economic Prospects (GEP) report has said.
Bad weather in the United States, the crisis in Ukraine, rebalancing in China, political strife in several middle-income economies, slow progress on structural reform, and capacity constraints are all contributing to a third straight year of sub five per cent growth for the developing countries as a whole, the Bank said in the report.
“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 per cent,” said World Bank Group president Jim Yong Kim in a statement from the Bank’s Washington, DC headquarters. “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 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 per cent. Signs point to strengthening in 2015 and 2016 to 5.4 and 5.5 per cent, respectively. China is expected to grow by 7.6 per cent this year, but this will depend on the success of rebalancing efforts.
If a hard landing occurs, the reverberations across Asia will be widely felt.
Activity in the Latin America and the Caribbean region has been weak, reflecting stable or declining commodity prices, the drop in first quarter US GDP growth and domestic challenges, the Bank stated. The regional weakness carries over from 2013, weighing on merchandise exports in a number of countries. First quarter data for Argentina, Brazil, Mexico and Peru was weak, reflecting a variety of influences including the weather-related decline in US GDP, the recent tax increase in Mexico and slower Chinese growth. In contrast, Bolivia and Panama are expected to grow by more than five per cent this year. Regional exports, including tourism receipts in the Caribbean, are expected to firm due to stronger growth in advanced countries, and improved competitiveness following earlier currency depreciations, the Bank said.
Brazil, the region’s largest economy, is projected to grow at a weaker-than-expected 1.5 per cent this year, strengthening to 2.7 per cent and 3.1 per cent in 2015 and 2016, respectively.
