São Paulo – The world economy could grow 2.9% this year, after posting 2.4% growth in 2015, according to the Global Economic Prospects report released this Wednesday (6) by the World Bank. The institution says “modest” growth is expected as a result of weak performance in major emerging markets. <\/p>\n
The report claims, for instance, that China will continue to slow down, and that recession is set to persist in Brazil and Russia this year. Developing countries are expected to grow 4.8%, which is higher than the 4.3% growth seen in 2015.<\/p>\n
The bank remarks that falling commodity prices and financial instability have “drained global economic activity” last year. In 2016, the growth expected from wealthy countries will only partly mitigate the weak performance from emerging nations, according to the director of the World Bank’s Development Prospects Group, Ayhan Kose.<\/p>\n
But emerging countries are not expected to perform in linear fashion. “There is greater divergence in performance among emerging economies,” said the bank’s chief economist Kaushik Basu in a press release.<\/p>\n
In Brazil, for example, Gross Domestic Product (GDP) shrank 3.7% in 2015 and should contract 2.5%, before bouncing back to 1.4% growth in 2017 and 1.5% growth in 2018. In addition to the low price of commodities and financial volatility, the country is struggling with its fiscal deficit, hiking inflation and political uncertainty. <\/p>\n
In the Middle East and North Africa, 5.1% growth is expected in 2016, up from 2.5% in 2015. One of the expected reasons is the lifting of economic sanctions on Iran, following the signing of a nuclear deal by the country last year. The report, however, does not mention escalating animosity between Iran and Saudi Arabia, the Gulf’s two major powers, which severed diplomatic ties this week, the consequences of which are hard to predict. <\/p>\n
In Egypt, another regional powerhouse, 3.8% growth is expected in the fiscal year ending June 2016, down from 4.2% in the preceding period. Iraq is seen to grow 3.1% this year, up from 0.5% in 2015.<\/p>\n
The report notes that the downward spiral in oil prices that began in mid-2014 allowed oil importing countries to cut fuel subsidies, enabling them to grow faster. The positive effects, according to the World Bank, outweighed the losses incurred by oil exporting countries. <\/p>\n
The continued decline in prices, however, poses a risk to the region’s economy, as does the deterioration of ongoing conflicts. The institution also warns that if governments fail to provide better living conditions to their people, new popular uprisings could erupt. <\/p>\n
*Translated by Gabriel Pomerancblum<\/strong><\/p>\n