In the years immediately following the global financial crisis of 2008, the claim was frequently advanced that, while the major capitalist economies were severely impacted, the so-called developing economies would provide a new base for world growth.
This upbeat assessment has looked increasingly fragile in the recent period. It has now been officially buried in the latest report on the global economy released by the World Bank yesterday.
Presenting the report, World Bank president Jim Yong Kim said: “Developing countries were an engine of global growth following the financial crisis, but now they face a more difficult economic environment.” This was not a temporary phenomenon but the result of a “structural slowdown,” likely to last for years.
The report’s lead author, Franziska Ohnsorge, commented that “after four years of disappointing performance, growth in developing countries is still struggling to gain momentum.” Despite what he called “auspicious financing conditions”—the global low-interest regime—a “protracted slowdown” had been underway in many countries.
The bank cut its forecast for global growth to about 2.8 percent in 2015, down by 0.2 percentage points from its prediction in January.
The World Bank now appears to be pinning its hopes on the major economies, where it says recovery “is expected to gather momentum.” Even if its forecasts for a 2 percent growth in high-income countries in 2015 and 2.3 percent in 2016-17 are met, however, they are too low to provide much of a boost for the world economy.