The World Bank has cut its global growth forecast, warning the US alone cannot drive an economic recovery.
In its bi-annual report, the Bank predicted global growth of 3% this year and 3.3% next year, below its June forecast of 3.4% and 3.5% respectively.
“The global economy is running on a single engine…The American one. This does not make for a rosy outlook,” chief economist Kaushik Basu warned.
[contextly_sidebar id=”4k3whXGEb1VVVvtFGqlehqvBme8W4UEw”]However, it said lower oil prices would benefit some countries.
“The lower oil price, which is expected to persist through 2015, is lowering inflation worldwide and is likely to delay interest rate hikes in rich countries,” said Mr Basu.
“This creates a window of opportunity for oil-importing countries, such as China and India; we expect India’s growth to rise to 7% by 2016,” he added.
However, the Bank warned that lower oil prices would hurt growth in countries which export oil, such as Russia, weighing on its global growth predicitions.
The World Bank expects the Russian economy to contract by 2.9% this year, and to grow just 0.1% in 2016.
In contrast, it said economic activity in the US and the UK was “gathering momentum” as interest rates remain low.
But it said the lingering “legacies of the financial crisis’ meant the recovery had been “sputtering” in the eurozone and Japan.
The Bank warned low inflation could persist in the eurozone, and forecast growth of 1.1% in 2015, rising to 1.6% in 2016-17. In Japan, it expects growth to rise to 1.2% in 2015 and 1.6% in 2016.
“The gobal economy is at a disconcerting juncture,” Mr Basu added.