05 June, 2017
The World Bank has reaffirmed its forecast that global economic growth will improve to 2.7 per cent this year, with an improvement in manufacturing and trade, market confidence and commodity prices.
If governments face fiscal weaknesses in the event of economic stresses, commodity price declines (for commodity-reliant economies) or a sudden increase in financing costs, the bank said this would likely prompt them to tighten the purse strings, restructure debts or trigger rapid inflation.
Growth in advanced economies is projected to accelerate to 1.9% this year, while emerging markets and developing economies are expected to expand by 4.1%, compared with 3.5% last year. The largest economy is projected to grow 2.1% this year and 2.2% next year.
The World Bank on Sunday raised its forecast for Japan's economic growth this year to 1.5 percent, up 0.6 percentage point from its estimate in January, due to rising exports and a pickup in capital spending in preparation for the 2020 Tokyo Olympics. Recovering activity in these economies should have significant positive effects for growth in other emerging and developing economies and globally, the World Bank report said.
"In the Philippines, growth, led by accelerated public and private investment, is expected to remain at just under 7.0 percent in 2017-2019 - significantly higher than the long-term average of 4.3 percent", the World Bank report read.
The World Bank, however, warned of substantial risks such as new trade restrictions which could derail the welcome rebound in global commerce. Persistent policy uncertainty could dampen confidence and investment.
"The government has especially taken steps to address the banking sector weakness, but that remains on the to-do list", Kose told PTI. "Manufacturing and trade are picking up, confidence is improving, and worldwide financing conditions remain benign".
China's growth outlook for both 2017 and 2018 were left unrevised at 6.5 percent and 6.3 percent, respectively.
But those cuts would also likely widen the budget deficit by up to 2.4 percentage points of GDP over the same period. Likewise, Japan's economy is projected to gain 1.5 percent this year and 1 percent in 2018.
Geopolitical tension in the region or at its periphery could suppress growth.
An upturn in the United States is expected to support growth in advanced economies, alongside stronger domestic demand in the eurozone and Japan, and firming investment across the developed world.
The forecast figures were released under the June 2017 Global Economic Prospects report.
The bank's outlook for global growth was unchanged from a forecast it published January - a surprising bit of good news: In the sluggish aftermath of the 2007-2009 Great Recession, the bank repeatedly had to downgrade its original forecasts as hoped-for improvements never arrived.
