World Bank expects global economy to pick up in 2017

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The World Bank has predicted that the global economy will see moderate recovery in the coming years, with a growth rate of 2.7 percent in 2017 and 2.9 percent in 2018.

The projected rate for 2017 is faster than this year’s 2.3-percent growth, but pared back by 0.1 percentage points from the bank’s forecast made in June 2016.

Traders work on the floor of the New York Stock Exchange in New York, US on September 12, 2016. /CFP Photo

In its semi-annual Global Economic Prospects report released on Tuesday, the Washington-based World Bank attributed the slight acceleration in growth to improvements in emerging and developing economies, which are expected to see receding headwinds and strengthened commodity prices.

It expects that emerging and developing economies would grow 4.2 percent in 2017 and 4.6 percent in 2018, a pickup from 3.4 percent in 2016.

These economies will contribute 1.6 percentage points to global growth in 2017, accounting for about 60 percent of global growth for the first time since 2013, according to the report.

The World Bank kept its forecast for China's economic growth unchanged, with 2017 growth projected at 6.5 percent and 2018 growth at 6.3 percent. The Chinese economy will continue to develop sustainably as it is rebalancing from manufacturing to services, despite the reemerging concerns for property markets, said the bank.

An Egyptian vendor sits outside his shop in the tourist area of Al-Hussein in the capital Cairo on October 24, 2016. /CFP Photo

In contrast to the relatively buoyant growth seen in the emerging market economies, "advanced economies continue to be afflicted by weak underlying growth and low inflation, while uncertainty about future policy direction increased," the report noted.

It forecast advanced economies to grow 1.8 percent both in 2017 and 2018, slightly up from 1.6 percent in 2016.

The US economy is expected to grow 2.2 percent in 2017 and 2.1 percent in 2018. But the bank added that US policies will likely undergo changes under the new Trump administration, which could have significant implications for both the US and global economy.

According to the World Bank's estimation, if the new administration's tax cut proposals are fully implemented, these measures could raise US GDP growth forecasts to 2.2-2.5 percent in 2017 and 2.5-2.9 percent in 2018, without considering additional policy changes after Trump assumes office.

The World Bank headquarters in Washington, DC, US /CFP Photo

However, the report also warned that heightened uncertainty about potential policy initiatives could set back already-weak global investment.

"There is substantial uncertainty around baseline projections for global growth, where downside risks still dominate," said the World Bank, following the surprise electoral outcomes in the US and UK.

That uncertainty, together with financial market disruptions amid tighter global financing conditions, may be amplified over the medium term by mounting protectionist tendencies, slower potential growth and lingering vulnerabilities in some emerging market economies.

The World Bank called on advanced economies to introduce more supportive fiscal policies, and suggested emerging markets find a balance between fiscal adjustment, measures to reduce vulnerability and growth-oriented reforms.

(Based on an original story by Xinhua News Agency)

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