Experts at the World Bank have issued a glum assessment of prospects for global economic growth, and say if the downturn becomes serious it could affect every nation and region.
They say the world’s economy will grow more slowly that previously predicted this year due to Europe’s debt crisis, and efforts elsewhere to fight inflation. The economists also say growth could be threatened by tensions in the Middle East and North Africa, and will not be helped by political bickering in Washington.
Tuesday’s report from the bank says the world economy will grow just 2.5 percent this year, while U.S. economic growth will slow to just 2.2 percent. The same report says emerging economies will grow 5.4 percent, which is almost one percentage point lower than prior estimates. The bank’s analysts cut their assessment of Europe’s economy from modest growth to shrinking by three-tenths of a percent.
Falling demand from Europe and other developed nations is one reason to expect reduced trade globally, along with lower prices and smaller profits for producers of oil, food, and other commodities. Recession or reduced growth in wealthy nations will also mean fewer jobs and less income for immigrants who customarily send money back to their home countries.
The report’s authors urged officials in developing nations to “evaluate their vulnerabilities and prepare for further shocks.” They also noted that many of the resources governments used to cope with the financial crisis in 2008 have been used up, so governments will have fewer tools to cope with any new downturn.