Global growth is set to fall 1% this year as developing nations feel the pinch of rising inflation, a new World Bank study reveals.
The Global Development Finance 2008 report shows world GDP dipping from 3.7% in 2007 to 2.7% this year, with growth in developing countries slowing from 7.8% to 6.5%.
Private capital flows to emerging markets, which hit a record $1trn last year, is expected to fall to about $800bn.
While the flows would still be at the second highest level ever, the bulk is heading to the largest of the developing nations – the BRIC nations of Brazil, Russia, India and China.
The World Bank says the poorest nations will continue to remain reliant on official aid, which fell $107.1bn in 2005 to $103.7bn last year.
World Bank development prospects group and international trade department director Uri Dadush says developing nation growth is still robust despite financial turmoil and cost of living concerns.
“Strong growth in the developing world is certainly helping to offset the sharp slowdown in the US,” he says.
“But at the same time, rising global inflationary pressures - especially high food and energy prices - are hurting large segments of the poor around the world.”IFAonline
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