Fed taper poses risks to global pick-up: World Bank
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WASHINGTON -The World Bank on Tuesday raised its growth forecasts for the global economy, but warned of potential volatility in capital flows as the United States withdraws its stimulus.
In its latest Global Economic Prospects report, the World Bank said that both high-income and developing countries appeared to be "finally turning the corner five years after the global financial crisis."
Global economic growth was estimated to hit 3.2 per cent this year, accelerating from a 2.4 per cent annual pace in 2013.
Growth was picking up in developing countries, supported by the more robust growth in advanced economies and China's continued strong expansion.
"However, growth prospects remain vulnerable to headwinds from rising global interest rates and potential volatility in capital flows, as the United States Federal Reserve Bank begins withdrawing its massive monetary stimulus," the development lender said.
The World Bank highlighted that growth in developing countries will pick up at a slower pace than previously anticipated. But that was "not a cause for concern" because the slowdown largely reflects a cooling off of "the unsustainable turbo-charged pre-crisis growth."
Gross domestic product growth in developing countries was projected to rise to 5.3 per cent this year from 4.8 per cent in 2013.
High-income countries were expected to see GDP growth of 2.2 per cent, following a sluggish 1.3 per cent last year.
