The World Bank has raised its forecast for global growth this year, its first upgrade in three years.
The poverty-fighting institution also predicted a faster pace of expansion for both 2015 and 2016.
It thinks the world economy had finally reached a “turning point” with the performance of richer countries gaining momentum, which should support stronger growth in developing countries:
Andrew Burns, the lead author of the World Bank’s ‘Global Economic Prospects’ report said: “What we find in global economic prospects this year, for the first time in five years, is high income economies are accelerating, they are going to be contributing to global growth in a way that they haven’t for some time. That is going to be good for developing countries.
As advanced economies strengthen, countries may begin pulling back from the massive monetary stimulus launched at the height of the crisis.
The US Federal Reserve has started winding down, or tapering, its monthly asset-purchase plan this month, though it expects to keep interest rates low for at least another year.
Burns is not too worried about the effects of the Fed’s action. He told reporters: “A little bit of a cloud in the outlook is the taper, how that might affect developing countries, our expectation is that it is going to be a relatively smooth process.”
The World Bank sees US growth reaching 2.8 percent this year, up from 1.8 percent in 2013.
Eurozone GDP, which probably contracted 0.4 percent last year, is forecast to rise 1.1 percent this year.
The bank said improvement in the 18-countries that make up the eurozone is a factor in its upgrade for the advanced – or developed – nations.
It said there are still risks to its outlook, but they have subsided.
Those risks include a protracted recovery in the eurozone, fiscal policy uncertainty in the United States, and if there should be problems with China’s shift “to slower but more sustainable consumption-led growth”.
By the numbers
Global gross domestic product is predicted to expand 3.2 percent this year, from 2.4 percent in 2013. In the bank’s last forecast in June, it expected global growth to reach 3.0 percent in 2014.
The bank again shaved its forecasts for developing countries, to 5.3 percent for 2014, from the 5.6 percent it predicted in June.
Its forecast for China this year was lowered to 7.7 percent from 8.0 percent.
Brazil’s growth forecast is cut to to 2.4 percent from 4.0 percent,Mexico’s to 3.4 percent from 3.9 percent and India’s to 6.2 percent from 6.5 percent.
Emerging markets have grown at their slowest pace in a decade for the past two years, after chalking up growth rates of around 7.5 percent before the global financial crisis hit in 2008.