The World Bank on Wednesday lowered its growth estimate for the global economy this year, but said that expansion appeared better balanced than just before the 2008 financial crisis.
The global economy was expected to grow at an annual rate of 2.2 percent this year, led by a 5.1 percent surge in developing countries, down from a January estimate of 2.4 percent.
“The overall acceleration is not stronger because the majority of developing countries have more-or-less fully recovered from the 2008 financial crisis,” the report said.
World Bank chief economist Kaushik Basu said the estimates are “actually somewhat similar to what we were saying about six months ago.”
“In a turbulent global economy, that is good news, when you have two periods without any big shifts and changes,” he told a news conference.
Growth in high-income countries was notably dampened by the recession-mired eurozone. Unsurprisingly, the sharpest downward revision was for the bloc, where a contraction of 0.6 percent was seen, down from the prior estimate of a 0.1 percent dip.
“The challenges are especially difficult in high-income Europe, where growth is being held back by weak confidence and continued banking sector and fiscal restructuring,” the report said.
Collateral damage from the eurozone crisis continued to be felt in the Middle East and North Africa region, one of the eurozone’s most important trading partners.
Overall, the World Bank said that economic risks appeared to be diminishing and growth was more stable than in the buildup to the US-centered 2008 financial crisis that pitched the global economy into recession.
“We’re moving toward a less volatile period where growth is going to be slower, but less subject to strong fluctuations, especially those coming from the high-income world that we’ve observed in the previous years,” said Andrew Burns, co-author of the report.
Burns said the robust growth in the pre-crisis period was due to the financial “bubble” and that now growth was more in line with the underlying capacity in developing countries.
“This a case of moving toward the new normal of the post-crisis,” he said.
The World Bank estimates the global economy should expand after this year’s trough to 3 percent next year, and to 3.3 percent in 2015.