The world economy is projected to strengthen this year, with growth picking up in developing countries and high-income economies appearing to be finally turning the corner five years after the global financial crisis, says the World Bank's newly-released Global Economic Prospects (GEP) report.
The firming of growth in developing countries is being bolstered by an acceleration in high-income countries and continued strong growth in China. However, growth prospects remain vulnerable to headwinds from rising global interest” rates and potential volatility in capital flows, as the US Federal Reserve Bank begins withdrawing its massive monetary stimulus.
"Growth appears to be strengthening in both high-income and developing countries, but downside risks continue to threaten the global economic recovery," said World Bank Group president Jim Yong Kim.
"The performance of advanced economies is gaining momentum, and this should support stronger growth in developing countries in the months ahead. Still, to accelerate poverty reduction, developing nations will need to adopt structural reforms that promote job creation, strengthen financial systems, and shore up social safety nets."
Global GDP growth is projected to firm from 2.4 per cent in 2013 to 3.2 percent this year, stabilising at 3.4 per cent and 3.5 per cent in 2015 and 2016, respectively, with much of the initial acceleration reflecting stronger growth in high-income economies.