While the new estimate is higher than the Bank’s previous estimate at 3.5 percent in its previous semi-year outlook, which was released in January, it is higher than the Bank’s estimate at 4.7 percent, which was announced on May 8 in the Bank’s regional outlook.
“In Turkey, growth is forecast to slow to 4.5 percent in 2018 and to 4 percent in 2019, as delays in fiscal consolidation and the extension of the credit support program temper an anticipated slowdown following the strong recovery last year” the Bank said in its report, which was released late on June 5.
“In countries with current account deficits such as Turkey, filling external financing needs could become challenging,” the report warned.
Growth in the Europe and Central Asia region is projected to moderate to an upwardly revised 3.2 percent in 2018 and edge down to 3.1 percent in 2019 as a modest recovery among commodity exporting economies is only partially offset by a slowdown among commodity importers.
“A disorderly tightening of global financial conditions could trigger a sharp deterioration of external financing conditions and lead to a reversal of capital flows and weakening economic activity,” the Bank warned for the region.
“An escalation of policy uncertainty could dampen economic activity in the region. Policy disputes among European Union members and EU institutions could deter international investors. Finally, since the region is open to trade and is integrated into global supply chains, it would be vulnerable to a rise in global protectionism,” it added.
‘Emerging, developing economies to accelerate’
Despite recent softening, global economic growth will remain robust at 3.1 percent in 2018 before slowing gradually over the next two years, as advanced-economy growth decelerates and the recovery in major commodity-exporting emerging market and developing economies levels off, the World Bank also said.
“If it can be sustained, the robust economic growth that we have seen this year could help lift millions out of poverty, particularly in the fast-growing economies of South Asia,” World Bank Group President Jim Yong Kim said.
“But growth alone won’t be enough to address pockets of extreme poverty in other parts of the world. Policymakers need to focus on ways to support growth over the longer run—by boosting productivity and labor force participation—in order to accelerate progress toward ending poverty and boosting shared prosperity.”
Activity in advanced economies is expected to grow 2.2 percent in 2018 before easing to a 2 percent rate of expansion next year, as central banks gradually remove monetary stimulus, the June 2018 Global Economic Prospects said.
Growth in emerging market and developing economies overall is projected to strengthen to 4.5 percent in 2018, before reaching 4.7 percent in 2019 as the recovery in commodity exporters matures and commodity prices level off following this year’s increase.
“This outlook is subject to considerable downside risks. The possibility of disorderly financial market volatility has increased, and the vulnerability of some emerging market and developing economies to such disruption has risen,” the Bank said.
Trade protectionist sentiment has also mounted, while policy uncertainty and geopolitical risks remain elevated, the Bank added.
The report urges policymakers to implement reforms that lift long-term growth prospects.
“A rapidly changing technological landscape highlights the importance of supporting skill acquisition and boosting competitiveness and trade openness. Improving basic numeracy and literacy could yield substantial development dividends,” the report said.
“Finally, promoting comprehensive trade agreements can bolster growth prospects,” it added.