Global growth forecast downgraded to 2.4%

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Global growth has been downgraded by the World Bank, to 2.4 per cent, from its estimate of 2.9 per cent at the start of the year.

Weak economies, low commodity prices and depressed global trade have all contributed to the downgrade.

Half of the downward revision was due to slow growth in developed nations, which are being hit by low oil and commodity prices, says the bank. The bank warned of a slowdown in these nations in 2016.

In particular, it highlighted oil exporting areas the Middle East and North Africa as seeing the largest growth downgrade, down 1.1 percentage points on January’s estimate, to 2.9 per cent.

For these countries GDP expectations have fallen 1.2 percentage points on estimates at the start of the year to 0.4 per cent now.

The bank also warned of growth in emerging markets, with the forecast for growth in these regions being cut from 5.9 per cent to 5.6 per cent.

Jim Yong Kim, president of the World Bank, says: “This sluggish growth underscores why it’s critically important for countries to pursue policies that will boost economic growth and improve the lives of those living in extreme poverty.

“Economic growth remains the most important driver of poverty reduction, and that’s why we’re very concerned that growth is slowing sharply in commodity-exporting developing countries due to depressed commodity prices.”

The IMF has already warned of a downgrade to global growth, saying a vote for the UK to exit the European Union could do “severe regional and global damage”.

In April the IMF reduced the 2016 UK growth forecast by 30 basis points from its January forecast, to 1.9 per cent, and reduced the 2017 forecast to 2.2 per cent.

It blamed the uncertainty resulting from the lead up to the Brexit referendum as well as fiscal consolidation.