The World Bank has sharply reduced its estimate of global economic growth in 2013, projecting that the downturn in Europe and the United States’ fiscal problems will continue to weigh on investment and spending.
The bank said it expects the world economy to expand 2.4 percent this year, compared with 3 percent growth it had forecast as of June.
The second half of 2012 saw a worsening of the euro crisis, fiscal brinksmanship in the United States that left central debt and spending issues unresolved, and a recognition that developing countries were slowing as well.
Although World Bank officials said they found some developments last year “comforting,” including the deal that avoided the worst of the “fiscal cliff” in the United States, they still saw big risks ahead: a misstep in Europe that aggravates problems there, or a collapse in fiscal talks that threatens the U.S. sovereign debt rating.
That alone could force global growth down a notch.