Prepare for ‘’tougher times’’—WB warns developing nations
The World Bank is warning developing countries to prepare for ‘’tougher times’’ and a long period of volatility in the global economy, while re-emphasizing medium-term development.
The bank said increased uncertainty will add to pre-existing headwinds from budget cutting, banking-sector deleveraging developing countries’ capacity constraints.
‘’A resurgence of tensions in high-income Europe has eroded the gains made during the first four months of this year, which saw a rebound in economic activity in both developing and advanced countries and an easing of risk aversion among investors. Since May 1st, increased market jitters have spread,’’said the bank’s Global Economic Prospects (GEP) for 2012 released on Wednesday.
In Sub-Saharan Africa, the World Bank said economic growth in Sub-Saharan Africa remained robust in 2011 at 4.7%.
The report noted that apart from South Africa, ‘’growth in the rest of the region was stronger, at 5.6%, making it one of the fastest growing developing regions. Higher commodity prices and improved macroeconomic and political stability in recent years has supported increased private investment flows to the region, with promising prospects in the medium term.’’
It said growth is expected to strengthen to 5%in 2012, 5.3% in 2013 and 5.2% in 2014, as global demand firms and domestic demand remains robust.
“Global capital market and investor sentiment are likely to remain volatile over the medium term – making economic policy setting difficult. In this environment, developing countries should focus on productivity-enhancing reforms and infrastructure investment instead of reacting to day-to-day changes in the international environment,” said Hans Timmer, Director of Development Prospects at the World Bank.