The global economy will grow significantly less than expected

– Four years after the outbreak of the global financial crisis, the worst seems to be over, but the global economy remains fragile, stated the World Bank in its latest economic outlook report, in which it sharply reduced its growth forecast for the global economy this year.

In the report published yesterday, the World Bank estimates that last year the global gross domestic product (GDP) grew by 2.3 percent, while this year a growth of 2.4 percent is expected. This is significantly lower than the 3 percent that the Bank estimated in its report from June last year.

The World Bank expects a gradual acceleration of global economic growth in 2014, when GDP is expected to strengthen by 3.1 percent, while in 2015 the global economy could grow by 3.3 percent.

– The recovery that the Bank expected last year is likely to occur only at the end of the first and in the second quarter of this year, and not earlier – said Andrew Burns, the lead author of the Global Economic Outlook report.

The World Bank warned that the political struggle in the U.S. over raising the debt ceiling and reducing budget spending could negatively impact economic growth, cause a loss of confidence in the U.S. currency, and disturb financial markets.

– Uncertain policy in the U.S. has already weakened growth. If lawmakers fail to agree on these measures, the loss of confidence in the currency and a general increase in market tensions could reduce economic growth in the U.S. by 2.3 percent, and in the world by 1.4 percent – stated Burns.

The Bank has also reduced its growth estimates for developing countries this year, which last year achieved the lowest growth rate in the last decade, at 5.1 percent. This year, these countries could achieve economic growth of 5.5 percent, while in June last year the Bank expected growth of 5.9 percent. Next year, the economic growth of these countries could accelerate to 5.7 percent, and in 2015 to 5.8 percent.

Before the financial crisis in 2007, these countries as a whole achieved economic growth of about 7.5 percent annually, with China alone at 10 percent.

The World Bank predicts that China’s economic growth will reach 8.4 percent this year, but will slow down to 7.9 percent by 2015.

In comparison, growth in the developed economies of the world will reach only 1.3 percent this year, under pressure from reduced consumption, high unemployment, and weak consumer and business sentiment, estimates the World Bank.

Next year, their economic activities could strengthen by 2 percent, and in 2015 by 2.3 percent.

In the Europe and Central Asia region, the economic growth rate sharply slowed to 3 percent last year, after 5.5 percent recorded in 2011. This year, analysts at the World Bank believe that economic growth in that region could accelerate to 3.6 percent, and to 4.3 percent next year.

The medium-term outlook for that region, the Bank notes, will largely depend on progress in addressing external and domestic imbalances, insufficient competitiveness, and structural constraints.

The World Bank includes 21 countries with low and middle income in the Europe and Central Asia region, defining as a criterion for inclusion on this list a gross national income per capita below $12,276, achieved in 2010.

As a result, Croatia, the Czech Republic, Estonia, Hungary, Poland, Slovakia, and Slovenia are excluded from this report for that region, the World Bank states.