‘Developing countries can’t wait for return to growth in high-income countries’ – World Bank

Developing countries need to focus on raising the growth potential of their economies, while strengthening buffers to deal with risks from the Euro area and fiscal policy in the United States, says the World Bank in its newly released Global Economic Prospects (GEP) report. Four years after the onset of the global financial crisis, economic recovery remains fragile and uncertain, clouding the prospect for rapid improvement and a return to more robust economic growth, said president Jim Yong Kim. "Developing countries have remained remarkably resilient thus far. But we can't wait for a return to growth in the high-income countries, so we have to continue to support developing countries in making investments in infrastructure, health and education. This will set the stage for the stronger growth that we know that they can achieve in the future,” he said. Last year developing countries recorded among their slowest economic growth rates of the past decade, partly because of the heightened Euro area uncertainty in May and June of 2012. “From hopes for a U-shaped recovery, through a W-shaped one, the prognosis for global growth is getting alphabetically challenged. With governments in high-income countries struggling to make fiscal policies more sustainable, developing countries should resist trying to anticipate every fluctuation in developed countries and, instead, ensure that their fiscal and monetary policies are robust and responsive to domestic conditions,” said Kaushik Basu, senior vice president and chief economist at The World Bank.