Support The Moscow Times!

World Bank Cuts Growth Outlook Citing Ukraine Crisis

The World Bank Group headquarters building in Washington.

The World Bank on Tuesday trimmed its global growth forecast, saying a confluence of events, including the Ukraine crisis, dampened economic expansion in the first half of the year.

The poverty-fighting institution predicted the world economy would grow 2.8 percent this year, below its prior forecast of 3.2 percent made in January, but it expressed confidence activity was already shifting to more solid footing.

In its twice-yearly Global Economic Prospects report, the World Bank said tensions between Ukraine and Russia hit confidence worldwide. The bank also cut its growth forecast for the U.S. to 2.1 percent from 2.8 percent to account for the toll taken on growth by the weather at the start of the year.

The U.S. economy contracted for the first time in three years in the first quarter, but it already appears to be rebounding.

"Yes, there has been a big downgrade in 2014," Andrew Burns, the report's lead author, said in an interview. "But that's mainly a reflection of stuff that's already happened."

The World Bank expects growth to quicken later this year as richer economies continue their recovery. It kept its global growth forecasts for the next two years unchanged at 3.4 percent and 3.5 percent, respectively.

The forecasts assume tensions in Ukraine will persist this year but will not worsen. An escalation in the crisis could further shake global confidence, prompting firms to postpone investments and crimping growth in developing economies by as much as 1.4 percentage points under the worst-case scenario, the bank said.

"The markets, investors, don't like uncertainty," Burns said. "It's also pretty clear that there's a potential for tensions [in Ukraine] to develop, and for the situation to degrade."

Russia and Ukraine are seeking to resolve a gas pricing dispute that is at the heart of the crisis between the two countries. Failing to do so could set back peace moves that are gaining momentum after weeks of violence in east Ukraine.

See also:

IMF Chief Says Ukraine Crisis Damaging Russian Economy

Sign up for our free weekly newsletter

Our weekly newsletter contains a hand-picked selection of news, features, analysis and more from The Moscow Times. You will receive it in your mailbox every Friday. Never miss the latest news from Russia. Preview
Subscribers agree to the Privacy Policy

A Message from The Moscow Times:

Dear readers,

We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."

These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.

We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.

Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.

By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.

Once
Monthly
Annual
Continue
paiment methods
Not ready to support today?
Remind me later.

Read more