World Bank sharply lowers global economic growth rate

Developing countries should prepare for further downside risks, as the eurozone debt problems and weakening growth in several big emerging economies are dimming global growth prospects, the Washington-based organization said in its newly-released flagship report "Global Economic Prospects 2012".

"The world economy has entered a very difficult phase characterized by significant downside risks and fragility," the report said.

A leading Chinese news agency said the bank has lowered its growth forecast for 2012 to 5.4 percent for developing countries and 1.4 percent for high-income countries, down from its June estimates of 6.2 percent and 2.7 percent respectively.

Global growth is now projected at 3.1 percent for 2013, down from its June estimate of 3.6 percent.

The eurozone is predicted to register an output contraction of 0.3 percent in 2012, before picking up steam to grow 1.1 percent in 2013 as a consequence of the ongoing eurozone debt crisis.

"The financial turmoil generated by the intensification of the fiscal crisis in Europe has spread to both developing and high-income countries, and is generating significant headwinds," the report said.

The US economy is predicted to grow 2.2 percent and 2.4 percent for 2012 and 2013 respectively, down from the World Bank's June estimates of 2.9 percent and 2.7 percent respectively.

The forecast for the Chinese economy has also been lowered to 8.4 percent and 8.3 percent for 2012 and 2013 respectively. The previous estimates were 8.7 percent and 8.8 percent respectively.

"Developing countries need to evaluate their vulnerabilities and prepare for further shocks, while there is still time," said Justin Yifu Lin, the World Bank's chief economist and senior vice president for Development Economics, in a World Bank statement issued on Tuesday. (IANS)