The World Bank has reaffirmed its forecast that global economic growth will improve to 2.7 per cent this year, with an improvement in manufacturing and trade, market confidence and commodity prices.
According to the World Bank, advanced economies are showing signs of improvement, particularly Japan and Europe. The seven largest emerging markets – China, Brazil, Mexico, India, Indonesia, Turkey and Russia – will be the major drivers of global growth, however.
World Bank president Jim Yong Kim has classified the world’s economic recovery as “fragile but real”, warning that the world’s developing economies are being undermined by weak investment.
“Countries should seize this moment to undertake institutional and market reforms that can attract private investment to help sustain growth in the long term,” said Kim.
He also warned that new trade restrictions could hinder the recovery in trade that is benefitting many advanced and developing economies, referring to the potential renegotiation of the North American Free Trade Agreement.
These restrictions could severely affect China and other Asian economies, according to the bank.
“Significant disruption to China’s exports would undermine its growth with large spillovers on the region,” the bank said in its latest report.
“Furthermore, trade restricting measures in the United States could trigger retaliatory measures.”
The bank also said exports and investment in Mexico could be negatively impacted, which will then trickle down to Central America.