Developing economies are hitting “full capacity activity levels” and need to refocus their efforts, the World Bank has said.
The bank’s “Prospect for a Global Recovery” report suggests developing countries should focus more on boosting their productivity, managing inflation and strengthening buffers against a future downturn.
The World Bank predicts global growth to remain strong over the next few years. Growth will slow to 3.2 per cent in 2011 before moving to 3.6% for both 2012 and 2013.
However, events such as the recent disasters in Japan are likely to reduce growth in high-income countries to 2.2 per cent in 2011, its report says. This figure is expected to stabilise at 2.7 per cent in both 2012 and 2013.
The report warns that high government deficits are likely to continue to pose challenges to a number of developed nations.