World Bank predicts slower growth in 2012

Adriene Hill Jan 18, 2012

Adriene Hill: The World Bank today issued a new study predicting the global economy will expand about 2.5 percent this year. That’s far slower than the growth rate they projected back in June.

For more we turn to Andrew Burns. He’s the lead author of the new report. Good morning, Andrew.

Andrew Burns: Good morning, Adriene. How are you?

Hill: I’m well. So, why are you expecting slower growth for the overall global economy?

Burns: It’s really a combined story. It’s partly, of course, what’s happening in Europe. But it’s also a lot to do with what’s happening in developing countries. Developing countries — like Brazil, Russia, India, China even — have been slowing now for some time, in part in response to the inflationary pressures that built up last year. So that’s very much part of the overall slowdown that we’re looking at.

Hill: And what is the outlook for these developing countries?

Burns: Well, for developing countries, we’re expecting growth to come down to about 5.4 percent in 2012; 6 percent in 2013. That 5.4 percent, of course, is a very strong number if you compare it with the United States. But if you compare it with how developing countries have been doing over the last ten years, it’s actually the second worst growth rate they’ve had — with the first being, of course, during the crisis year of 2009.

Hill: And what are the threats to growth that you’re paying attention to right now?

Burns: There are very many. Obviously, it’s a very difficult situation. One of them is just the fact that these developing countries — which have been the motor of growth at the global scale — are slowing at the same time that Europe appears to be entering into recession. So there’s a real risk that those two tendencies feed on one another, and cause us to grow even less quickly in 2012.

Hill: Andrew Burns of the World Bank. Thanks so much.

Burns: Thank you.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.