The World Bank is reducing its forecast for the global economy this year.
In January the agency had predicted that global growth would be 2.9 percent but that has now been reduced to just 2.4 percent.
Commodity-exporting countries have been struggling with low prices for materials. However, recently the price of oil has been rising considerably.
Commodity-exporting emerging market countries are expected to grow a meager 0.4 percent down from 1.2 percentage points in January.
The Bank predicted that the US economy would grow at just 1.9 percent down from 2.4 percent in 2015. The eurozone is expected to grow at the same rate as last year a tepid 1.6 percent. Japan is struggling as its economy was expected to grow by just 0.5 percent down from 1.3 percent in January. China's outlook is unchanged at 6.7 percent.
Commodity-importing emergency market countries are doing better but the lower energy prices and for other materials is so far not increasing growth. In January the group were predicted to have a growth rate of these countries was 5.9 but is now 5.8.
World Bank Chief economist, Kaushi Basu, said:"As advanced economies struggle to gain traction, most economies in South and East Asia are growing solidly, as are commodity-importing emerging economies around the world." He warned that in several emerging and developing economies there was a rapid rise in private debt. This could pose a risk to growth especially should non-performing bank loans rise.
One of the brighter spots is India where the growth rate is to hold steady at 7.6 per cent. Other countries such as Russia and Brazil are likely to have deeper recessions than forecast in January. The anemic growth prospects creates mounting risks including a further slowdown in major emerging markets.
The Bank attributes the lower growth expectations to the sluggish growth in advanced countries, coupled with low commodity prices, weak global trade, and smaller capital flows.
World Bank Group President, Jim Yong Kim, said: "This sluggish growth underscores why it’s critically important for countries to pursue policies that will boost economic growth and improve the lives of those living in extreme poverty.
Economic growth remains the most important driver of poverty reduction, and that’s why we’re very concerned that growth is slowing sharply in commodity-exporting developing countries due to depressed commodity prices.” In spite of the reduced growth expectations US stock market indices are near or at record highs.
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Ken is a retired philosophy professor living in the boondocks of Manitoba, Canada, with his Filipina wife. He enjoys reading the news and writing articles. Politically Ken is on the far left of the political spectrum on many issues.