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World Bank's "Global Economic Prospects" report forecasts slower growth in 2012

The World Bank's new "Global Economic Prospects" publication forecasts slower growth for almost all developing regions in 2012 because of protracted instability in the Euro area. The reports attributes its expectation of lower growth in developing regions to a series of factors associated with the euro zone debt crisis, including:

  • A flight of capital to "safe-haven" assets such as US and German government bonds;
  • A sharp reduction in loans and trade finance delivered by European banks to developing countries;
  • Lower global commodity prices;
  • Reduced workers' remittances to developing countries.

The report expects the impacts to be stronger if the financial and economic situation in Europe deteriorates further.

The developing regions that will be most affected in 2012 are those with the strongest dependency on the European economy, notably Eastern Europe-Central Asia and Middle East-North Africa. The latter region is also affected by political turmoil in Syria and Yemen and the impact of sanctions on Iran. With the exception of Sub-Saharan Africa, all developing regions can expect lower growth this year than in 2011, says the Bank's report.

The World Bank's full Global Economic Prospects report (English only) as well as summaries in other languages (French, Spanish & Arabic) can be found here:

http://web.worldbank.org/WBSITE/EXTERNAL/ EXTDEC/EXTDECPROSPECTS/EXTGBLPROSPECTSAPRIL/0,,menuPK:659178~pagePK: 64218926~piPK:64218953~theSitePK:659149,00.html

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