The World Bank revised its prediction for the growth of the global economy in 2012 on Tuesday, and it wasn’t a change toward the upside. In fact, the transnational organization said that it believes that the world economy will grow only 2.5 percent this year. Last summer, the World Bank had predicted a growth rate of 3.8 percent for the entire world.
The re-jiggering of the forecast was mainly, but not entirely, a function of the crisis in Europe. Rather than the previous anemic 1.8 percent estimate for European growth, the World Bank is now predicting that the euro zone will go retrograde and contract by 0.3 percent during 2012. The United States was revised downward as well, from 2.9 percent to 2.2 percent, but at least that’s some growth, rather than anti-growth.
Slower growth is already visible in weakening global trade and commodity prices, the organization also reported. Worldwide exports of goods and services expanded an estimated 6.6 percent in 2011—down from 12.4 percent in 2010—and are projected to rise by only 4.7 percent in 2012. Meanwhile, global prices of energy, metals and minerals, and agricultural products are down 10 percent, 25 percent and 19 percent respectively since peaks in early 2011. That’s emblematic of a slowing world economy, but it does have a silver lining, namely that declining commodity prices have contributed to an easing of headline inflation in most developing countries.
Read more...Economy Watch: World Bank Cuts World Growth Forecast to 2.5 Percent via MHNonline