WASHINGTON - A frustratingly slow economic recovery in developed nations is holding back the global economy, the World Bank said on Tuesday, as it sharply cut its outlook for world growth in 2013.
The World Bank forecast that global gross domestic product will inch up 2.4 percent this year, from 2.3 percent in 2012. In its last forecast in June, the bank projected global growth would reach 3.0 percent in 2013.
Andrew Burns, lead author of the bank's Global Economic Prospects report, said that a recovery the bank had anticipated last year was now expected "closer to the end of the first quarter and into the second quarter of 2013, rather than beginning a little earlier."
The World Bank also cut its forecast for developing countries, which last year grew at their slowest pace in a decade, to 5.5 percent in 2013 from 5.9 percent in a June forecast. It said growth in these countries should slowly pick up, reaching 5.7 percent next year and 5.8 percent in 2015.
The bank projected that growth in advanced economies should reach 1.3 percent this year weighed down by spending cuts, high unemployment and weak consumer and business confidence. Growth should strengthen next year to 2 percent and 2.3 percent in 2015.
While financial markets were buoyed by measures adopted last year to address the euro-zone debt crisis, the World Bank warned that a drawn-out political battle over the United States' self-imposed debt ceiling could damage growth in developing countries.
"Policy uncertainty (in the United States) has already dampened growth," the World Bank said. "Should policymakers fail to agree such measures, a loss of confidence in the currency and an overall increase in market tensions could reduce U.S. and global growth by 2.3 and 1.4 percent respectively," it added.
Burns urged developing countries to "maintain a steady hand on monetary policy" and not to react too forcefully to changed in developed countries.