Global economic growth is expected to moderate in 2007, according to the World Bank’s annual report, “Global Economic Prospects 2007.” The report projects global GDP growth to slow from 3.9% in 2006 to 3.1% in 2007.
The anticipated moderation is largely due to factors such as rising interest rates and moderating housing markets, particularly in developed economies like the United States. These factors are expected to dampen domestic demand in these regions.
Despite the projected slowdown, developing countries are expected to continue to experience robust growth. The report forecasts that developing countries will grow at an average rate of 5.4% in 2007, driven by strong domestic demand and increased trade.
However, the report also highlights several risks to the global economic outlook, including:
- Further increases in interest rates
- A sharper-than-expected slowdown in the US economy
- A resurgence of protectionist trade policies
- Geopolitical instability
The World Bank advises policymakers to remain vigilant and to implement policies that promote sustainable and inclusive growth.
Regional Outlook
East Asia and Pacific
Growth in East Asia and the Pacific is expected to remain strong, supported by robust growth in China. However, the region faces risks from a potential slowdown in the US economy and rising oil prices.
Latin America and the Caribbean
Latin America and the Caribbean are expected to experience moderate growth, driven by increased commodity prices and strong domestic demand. However, the region faces challenges from high levels of inequality and political instability.
Sub-Saharan Africa
Sub-Saharan Africa is projected to continue its strong growth performance, boosted by increased investment and improved governance. However, the region remains vulnerable to commodity price shocks and the spread of HIV/AIDS.
