Finland Times

 

A senior World Bank official on Wednesday sounded a warning note for a "disappointing" global economy in 2014, pointing to commodity prices, Ebola and political instability as the daunting risks.

     

The message was sent by World Bank Managing Director Sri Mulyani Indrawati in her speech at the ongoing Asia-Pacific Economic Cooperation (APEC) 2014 Finance Ministers' Meeting.

   

 "The picture has changed, and 2014 could turn out to be a disappointing year for the global economy," the managing director said.

     

Global economic growth has been revised downwards and is now expected at 2.6 percent this year, only marginally up from 2.4 percent in 2013, according to the World Bank.

     

"We should not be surprised if we are heading towards another downward revision of our forecasts, especially for 2015," said Indrawati.

     

Commodity-exporting countries will feel the pinch of "a weakening of many commodity prices since the summer," although this also helps ease balance of payments pressures in food and energy importing countries, she said.

     

The World Bank energy price index declined by about 6 percent during the third quarter after being stable in the first half of the year.

     

The second risk highlighted by Indrawati is Ebola, which is "an external shock playing out right now in West Africa."

     

If the virus continues to surge in the three worst-affected countries and spreads to neighboring ones, the regional financial impact could reach 32.6 billion U.S. dollars by the end of 2015. If this happens, it would deal a potentially catastrophic blow to the countries, according to a World Bank analysis.

     

Contagion, not in the medical, but in the psychological sense could have a significant negative impact on fast-growing low-income countries in Africa whose growth is becoming more important for the global economy, she added.

     

Political instability in the Middle East and the crisis in Ukraine are also expected to have a profound impact on financial flows, economic activities and growth prospects in related regions.

   

 "In sum, we are seeing an increasingly fragile recovery of the global economy with major risks out there," said Indrawati.

     

She called upon policymakers in high-income and emerging economies to "send a signal of confidence by taking necessary policy steps and tackling reforms to improve their fundamentals."