wpid-world-bank.jpgDeveloping countries are headed for a year of disappointing growth, as first quarter weakness in 2014 has delayed an expected pick-up in economic activity, according to the World Bank?s Global Economic Prospects (GEP) report, released on Wednesday.

Bad weather in the US, the crisis in Ukraine, rebalancing in China, political strife in several middle-income economies, slow progress on structural reform, and capacity constraints are all contributing to a third straight year of sub 5% growth for the developing countries as a whole.

?Growth rates in the developing world remain far too modest to create the kind of jobs we need to improve the lives of the poorest 40%,? said World Bank Group President Jim Yong Kim. ?Clearly, countries need to move faster and invest more in domestic structural reforms to get broad-based economic growth to levels needed to end extreme poverty in our generation.?

A statement from the Bank group said in the light of the foregoing, the Bank has lowered its forecasts for developing countries, now eyeing growth at 4.8% this year, down from its January estimate of 5.3%. Signs point to strengthening in 2015 and 2016 to 5.4 and 5.5% respectively. China is expected to grow by 7.6% in 2014, but this will depend on the success of rebalancing efforts. If a hard landing occurs, the reverberations across Asia would be widely felt.

Despite first quarter weakness in the United States, t4he recovery in high-income countries is gaining momentum. These economies are expected to grow by 1.9% in 2014, accelerating to 2.4 percent in 2015 and 2.5% in 2016. The Euro Area is on target to grow by 1.1% for 2014, while the United States economy, which contracted in the first quarter due to severe weather, is expected to grow by 2.1% this year (down from the previous forecast of 2.8%).

The global economy is expected to pick up speed as the year progresses and is projected to expand by 2.8s year, strengthening to 3.4 and 3.5% in 2015 and 2016, respectively. Using 2010 purchasing power parity weights, global growth would be 3.4%, 4.0% and 4.2% in 2014, 2015 and 2016, respectively. High-income economies will contribute about half of global growth in 2015 and 2016, compared with less than 40% in 2013.

The acceleration in high-income economies will be an important impetus for developing countries. High-income economies are projected to inject an additional $6.3 trillion to global demand over the next three years, which is significantly more than the $3.9 trillion increase they contributed during the past three years, and more than the expected contribution from developing countries.

Short-term financial risks have become less pressing, in part because earlier downside risks have been realized without generating large upheavals and because economic adjustments over the past year have reduced vulnerabilities. Current account deficits in some of the hardest hit economies during 2013 and early 2014 have declined, and capital flows to developing countries have bounced back. Developing country bond yields have declined, and stock markets have recovered, in some cases surpassing levels at the start of the year, although they remain down from a year ago by significant margins in many instances

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