Despite the spiraling of oil prices, the World Bank forecasted a low economic growth performance for the global market. This is based on the fact that the economies of countries in Europe, Middle East and Asia suffered tremendously from the effects of the lowered oil prices.
Last June 2014, World Bank announced its forecast for 2015 for a growth of 3.4 percent. However, in a recent pronouncement, the expectation was lowered to 3 percent.
The World economy
According to Kaushik Basu, World Bank’s chief economist, the global economy has come to a very disturbing phase. People and the economy should be enjoying the luxury of lowered oil prices. However, this is not the case of today’s economy. The general public may be directly benefited by the bottom low prices of oil where the prices of common commodities dipped; but on the bigger picture, the country’s economy is suffering.
Since the 20008 global crises, the worldwide economy has come to a very slow pace. This was not expected at all. The momentum of global economy was on the rise until the last quarters of 2014.
The dominant nations
World Bank reported that the economies of some nations such as the United States and United Kingdom is stable and have strong growth forecasts in the years to come.
However, other rich and influential nations such as other members of the Euro zone and the Asian power house Japan continue to struggle and are threatened with deflation.
Brazil and Russia, both major players in the oil exporting business will suffer adversely this year. China has slow growth predictions and India should catch up to Asia’s sleeping giant.
The World Bank also predicted the drop of 60 percent in oil prices. This has a positive effect on oil importing countries. While the World Bank expects optimism in the markets of oil importers, it said with caution that the effect of the lowered prices will not be felt immediately by the nation’s economy.
With oil prices falling rapidly, this phenomenon would lower the likelihood of inflation around the globe. Interest rates will be raised at a much slower pace.