WASHINGTON – The World Bank on Wednesday cut its global economic growth projection for 2013 due to the weak performance of the eurozone and the slowing growth in emerging economies, while boosting the growth estimate for Japan substantially on the back of policy effects.
In its latest Global Economic Prospects report, the World Bank projects global gross domestic product growth at 2.2 percent in real terms, down from 2.4 percent forecast in January.
For Japan, the bank raised its estimate to 1.4 percent from 0.8 percent.
“In Japan, a dramatic relaxation of macroeconomic policy has sparked an uptick in activity, at least over the short term,” it said.
The bank expects the Japanese economy to expand 1.4 percent in 2014 and 1.3 percent in 2015.
“For growth to remain strong through 2015, however, Japan will have to implement a robust set of productivity-enhancing policy changes,” the bank noted.
The eurozone economy is projected to shrink 0.6 percent in 2013, against a 0.1 percent contraction estimated in January. The region is seen returning to growth later, the bank said, estimating a 0.9 percent GDP expansion for 2014 and a 1.5 percent rise in 2015.
The bank slashed the Chinese growth projection for 2013 to 7.7 percent from 8.4 percent, while lifting the U.S. forecast to 2.0 percent from 1.9 percent.
“The global economy appears to be transitioning toward a period of more stable, but slower growth,” the report said.
High-income countries continue to face challenges of restoring financial-sector health and getting fiscal policy onto a sustainable path, it noted. “However, the likelihood that these challenges provoke a major crisis has declined,” it said.
For developing countries, the World Bank said the overall acceleration is not stronger as the majority of these countries “have more or less fully recovered” from the 2008 financial crisis.
For many of them, the estimated growth is “broadly in line with underlying potential growth, leaving little room for acceleration,” it added.