World Bank projects little global economic growth

The World Bank on Tuesday projected “weak growth” for the global economy this year under pressure from Europe’s debt crisis and other uncertainties.

The global economy should expand at a 2.5 percent rate, while growth in developing countries — the planet’s engine — should slow to 5.4 percent, the World Bank said in semi-annual projections.

The 2012 global growth rate would be two percentage points lower than in 2010 and the most sluggish pace in the last 10 years, excluding the 2009 recession. Last year the pace was 2.7 percent.

“Weak growth in 2012, a modest acceleration in 2013 and 2014,” the bank’s economists wrote in the Global Economic Prospects report.

“The after-effects of the 2008-2009 crisis have not yet played themselves out fully.”

Europe remained the epicenter of the World Bank’s concerns. “In the immediate term, tensions emanating from the euro area are the most serious potential risk for developing countries,” the economists highlighted.

“If conditions in high-income Europe deteriorate sharply such that one or more countries found themselves frozen out of financial markets, global economic consequences could be severe.”

The World Bank recommended that developing countries should cut debt and deficits where possible.

“A return to more neutral macroeconomic policies would help developing countries reduce their vulnerabilities to external shocks, by rebuilding fiscal space, reducing short-term debt exposures and recreating the kinds of buffers that allowed them to react so resiliently to the 2008-2009 crisis.”