The developed nations will see downward growth projections for 2016 from the Word Bank (WB) due to unimpressive economic progress in the current year, a top official attached to the lender in Colombo said.
With the external demand negatively affected by the slowdown in large emerging market economies, the forecast growth across the high-income economies for 2016 has been shaded down, but slightly improved from 2015, WB Senior Country Economist for Sri Lanka and the Maldives Ralph van Doorn told a forum in Colombo this week.
“The forecast for 2016, which will be released in a month from now, will be lower than what we projected earlier in the year. Although we see a pickup in the big economies, it is rather disappointing, and slower than we expected half a year ago,” shared Droon.
The senior economist did not go into the specifics stating much cannot be shared before the Global Economic Prospects publication is officially released in January 2016.
However, he said that while the growth forecast for the UK, US, Japan and China will be low, Russia will be in a “better position” despite the recession.
“Recovery in major high-income countries gained traction in 2015. This has been increasingly driven by stronger domestic demand, particularly in the US where employment conditions are improving markedly,” noted Droon.
In the Euro area, credit growth is observed to be picking up and unemployment is declining.
For Japan, the recovery remains more fragile despite strong policy stimulus.
Doorn pointed out that China’s economic slowdown became more pronounced in 2015 but remained orderly as further deceleration in sectors with excess capacity was partially offset by robust growth in services.
The tightening cycle of the US Federal Reserve is projected to be very gradual, while policy accommodation will likely continue in the Euro area and Japan.
Remittances generally are expected to recover, but risks of oil prices remain, he said.
With regard to the Trans-Pacific Partnership (TPP), Droon cautioned that non-member apparel, textiles and footwear exporters could face greater competition from Vietnam (member) in the TPP markets. (SAA)