16 January 2013

Uganda: World Bank Urges Countries On Economic Growth

In its report released on Jan. 16, the World Bank is urging the developing countries to maintain the reform momentum that underpinned the acceleration of growth during the 1990s and 2000s.

In the absence of additional efforts to raise productivity through structural reforms, investment in human capital, and improved governance and investment conditions, developing country growth may well slow, the bank says.

It adds the longer-term structural reform agenda should also include efforts to improve food security, especially in the more vulnerable developing economies.

This, according to the bank would involve increasing local productivity, improving local storage and transportation infrastructure, to reduce spoilage and enable improved access to foreign markets, both in good times and bad times.

"Given the still uncertain global environment, many developing countries would be well advised to gradually restore depleted fiscal and monetary buffers, so as to ensure that their economies can respond as resiliently as they did during the 2008/09 crisis, should a further significant external shock arise," said the bank.

It added that developing countries need to continue to be active players in the G-20 process, both in order to assist high-income countries recover from the crisis of 2008/9 but also to ensure that reform efforts, be they in financial or real markets, take into full consideration the potential impacts on developing markets.

It said that developing countries grew at an estimated 5.1%; the GDP growth rate it said was among the slowest in 10 years during 2012.

It said the improved financial conditions, a relaxation of monetary policy and somewhat stronger high-income country growth is projected to gradually raise developing-country growth to 5.5% in 2013, 5.7% in 2014 and 5.8% in 2015 -- roughly in line with these countries' underlying potential.

For high-income countries, fiscal consolidation, high unemployment and very weak consumer and business confidence will continue to weigh on activity in 2013, when GDP is projected once again to expand a mediocre 1.3%.

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