| Global economic growth to slow down to 3.1 percent in 2005: World Bank |
| Friday,April 08,2005 Posted: 06:50 BJT(2250 GMT) |
| Global economic growth will slow down to 3.1 percent in 2005 as a result of increases in US interest rates, fiscal tightening, and the effects of the 25-percent real effective appreciation of the Euro, the World Bank projected Wednesday.
A reduction in demand for developing-country exports is expected to slow growth among them to 5.7 percent in 2005, which still remains above recent growth trends, the bank's annual Global Development Finance 2005 report said. According to the report, global economic growth reached 3.8 percent in 2004, the fastest rate in four years. Developing countries outgrew high-income countries and gains were widespread, recording their fastest growth in more than a decade. But global growth momentum has peaked, and developing country gains are vulnerable to risks associated with adjustments to ballooning global imbalances, especially the 666 billion dollars US current account deficit, the report said. According to the report, the strong global performance in 2004 was underpinned by solid US growth and rapid expansion in China, India and Russia. Record expansion of 6.6 percent in developing nations was encouraged by favorable global conditions and supported by a surge in financial flows not seen since the financial crises of the late 1990s. The report said that net private capital flows, including debt and equity to developing countries, increased by 51 billion dollars to 301.3 billion dollars in 2004. "This recovery of financial flows is a welcome sign of renewed market interest in developing countries and a tribute to the substantial strengthening in economic fundamentals achieved in many countries," said Francois Bourguignon, the World Bank's chief economist. "But we should also keep in mind that current global financial imbalances pose risks -- of disorderly exchange rate movements, or of interest rate increases -- that could threaten these gains. Developing countries need to prepare themselves for adjustments, some of which could be sudden." The report came before the World Bank and its sister institution, the International Monetary Fund, will hold their joint spring meetings in Washington April 16-17. |
| (Source: English Site of Vancouver) |
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