WASHINGTON – The World Bank has raised its economic growth forecast for Japan to 2.4 percent in 2012 from an earlier estimate of 1.9 percent in terms of inflation-adjusted gross domestic product.
On the other hand, it is projecting just 1.5 percent growth for 2013, down 0.1 percentage point from its prediction in January.
In the latest Global Economic Prospects report, released Tuesday, the Washington-based institution left its global economic forecast unchanged at 2.5 percent this year, while trimming its growth estimate for 2013 to 3.0 percent from an earlier projection of 3.1 percent.
The eurozone economy, the center of the current financial market turmoil, is expected to contract 0.3 percent in 2012, unchanged from the estimate in January, the World Bank said, adding the eurozone will only grow 0.7 percent in 2013, against an earlier forecast of a 1.1 percent expansion.
In 2014, the world economy will accelerate its growth to 3.3 percent, with the Japanese economy growing 1.5 percent.
Although the first four months of 2012 were characterized by a marked improvement in market sentiment and a rebound in economic activity in both advanced and developing economies, “since the beginning of May, much of this progress has been called into question by a reigniting of euro-area jitters, which roiled financial markets around the globe,” the latest report said.
The World Bank said despite an expected moderate acceleration of growth in 2013 and 2014, the outlook remains fragile.
“Financial market uncertainty and fiscal consolidation associated with the high deficits and debt levels of high-income countries are likely to be recurring sources of volatility for the foreseeable future as it will take years of concerted political and economic efforts before debt to GDP levels of the United States, Japan and many eurozone countries are brought down to sustainable levels,” it said.
Under the most pessimistic scenario in which two of the larger eurozone economies face a serious credit squeeze, the global economy will shrink 2.0 percent this year, followed by deeper contractions of 4.5 percent in 2013 and 3.7 percent in 2014, the report said.
The upward revision of Japan’s growth estimate for 2012 was attributable to “improvements in labor markets and easier financial conditions,” which are boosting consumer demand, according to the report.
The World Bank revised downward its U.S. economic growth projection by 0.1 point to 2.1 percent in 2012, while leaving its estimate unchanged at 1.4 percent for developed countries as a whole.
Developing countries are projected to grow 5.3 percent this year and rise 5.9 percent in the following year, it said. China’s growth forecast for 2012 was cut by 0.2 point to 8.2 percent.