World Bank sees higher 2017 global growth, uncertainty over US policy

Thursday, 2017-01-12 11:55:17
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US President-elect Donald Trump tours a Carrier factory with Vice President-elect Mike Pence in Indianapolis, Indiana, US, December 1, 2016. Photo: Reuters
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The World Bank on Tuesday said global growth would accelerate slightly as recovering oil and commodity prices ease pressures on emerging-market commodity exporters and painful recessions in Brazil and Russia come to an end.

In its latest Global Economic Prospects report, the multilateral lender said it expected 2017 real gross domestic product growth to rebound to 2.7% from a post-financial crisis low of 2.3% last year.

Growth in advanced economies is expected to edge up to 1.8% in 2017 from 1.6% in 2016, the World Bank said, while emerging and developing economies will see growth accelerate to 4.2% this year from 3.4% last year.

However, there was considerable uncertainty surrounding the forecasts, which did not incorporate the effects of various policy proposals from US President-elect Donald Trump, which are expected to include increased fiscal stimulus from tax cuts and infrastructure spending, and a more protectionist trade stance.

The World Bank forecasts 2017 US growth at 2.2% versus 1.6% in 2016, but the increase could be considerably larger -- and have effects far beyond US shores.

However, this could lead to higher interest rates and tighter financial conditions that would have adverse effects on some emerging market countries that depend heavily on external financing.

It added that lingering uncertainty over the course of US economic policy could weigh on global growth by keeping investment money on the sidelines until there is more policy clarity.

The World Bank said China's growth would continue to slow, easing to 6.5% in 2017 from 6.7% in 2016, but growth would edge higher in some Southeast Asian economies, including Indonesia and Thailand.

India's strong growth is expected to accelerate, rising to 7.6% in 2017 from 7.0% in 2016 as reforms ease domestic supply bottlenecks and increase productivity.

Reuters