Developing countries should prepare for further downside risks, as eurozone debt problems and weakening growth in several big emerging economies are dimming global growth prospects, the World Bank said in a statement on Thursday.
In its newly-released Global Economic Prospects (GEP) 2012, the bank has lowered its growth forecast for 2012 to 5.4 percent for developing countries and 1.4 percent for high-income countries (-0. 3 percent for the eurozone), down from its June estimates of 6.2 and 2.7 percent (1.8 percent for the eurozone).
Global growth is now projected at 2.5 and 3.1 percent for 2012 and 2013.
It said that slower growth is already visible in weakening global trade and commodity prices.
Global exports of goods and services expanded an estimated 6.6 percent in 2011 (down from 12.4 percent in 2010), and are projected to rise by only 4.7 percent in 2012.
Meanwhile, global prices of energy, metals and minerals, and agricultural products are down 10, 25 and 19 percent since peaks in early 2011.
Declining commodity prices have contributed to an easing of headline inflation in most developing countries.
Although international food prices eased in recent months, down 14 percent from their peak in February 2011, food security for the poorest, including in the Horn of Africa, remains a central concern.
"Developing countries need to evaluate their vulnerabilities and prepare for further shocks, while there is still time," said Justin Yifu Lin, World Bank's Chief Economist and senior vice president for development economics.
To prepare for that possibility, Hans Timmer, director of development prospects at the World Bank, said that developing countries should pre-finance budget deficits, prioritize spending on social safety nets and infrastructure, and stress-test domestic banks.
While prospects in most low-and middle-income countries remain favorable, the ripple effects of the crisis in high-income countries are being felt worldwide./.