By Lesley Wroughton
WASHINGTON Jan 15 A frustratingly slow economic
recovery in developed nations is holding back the global
economy, the World Bank said on Tuesday, as it sharply cut its
outlook for world growth in 2013.
The World Bank forecast that global gross domestic product
will inch up 2.4 percent this year, from 2.3 percent in 2012. In
its last forecast in June, the bank projected global growth
would reach 3.0 percent in 2013.
Andrew Burns, lead author of the bank's Global Economic
Prospects report, said that a recovery the bank had anticipated
last year was now expected "closer to the end of the first
quarter and into the second quarter of 2013, rather than
beginning a little earlier."
The World Bank also cut its forecast for developing
countries, which last year grew at their slowest pace in a
decade, to 5.5 percent in 2013 from 5.9 percent in a June
forecast. It said growth in these countries should slowly pick
up, reaching 5.7 percent next year and 5.8 percent in 2015.
The bank projected that growth in advanced economies should
reach 1.3 percent this year weighed down by spending cuts, high
unemployment and weak consumer and business confidence. Growth
should strengthen next year to 2 percent and 2.3 percent in
While financial markets were buoyed by measures adopted last
year to address the euro-zone debt crisis, the World Bank warned
that a drawn-out political battle over the United States'
self-imposed debt ceiling could damage growth in developing
"Policy uncertainty (in the United States) has already
dampened growth," the World Bank said. "Should policymakers fail
to agree such measures, a loss of confidence in the currency and
an overall increase in market tensions could reduce U.S. and
global growth by 2.3 and 1.4 percent respectively," it added.
Burns urged developing countries to "maintain a steady hand
on monetary policy" and not to react too forcefully to changed
in developed countries.