The World Bank has cut its global growth forecast from an original estimate of 3.2% growth made in January to 2.8% growth because of the ongoing crisis in Ukraine and unseasonably cold weather in the U.S. cooling global economic growth in the first half of the year. The institution also cut its growth forecast for the U.S. from 2.8% to 2.1% due to the effects of adverse weather at the start of the year. Despite the U.S. economy contracting for the first time in three years in the first quarter, and the downgrades in the growth forecasts, the World Bank states that it believes that activity looks to be rebounding. Assuming that the crisis in Ukraine will persist but not worsen, the World Bank expects growth to pick up in the second half of the year as developed economies recover, and has kept its forecasts for the next two years unchanged at 3.4% and 3.5% respectively. Looking to 2015 and 2016, there is concern over financial volatility in emerging markets once the U.S. Federal Reserve starts to raise interest rates, and the need for developing countries to address structural issues that are impeding economic growth.
To receive relevant news stories with summaries provided by GAI Research & Insight, subscribe to Global AgDevelopments, our free weekly enhanced eNews service