The World Bank on Wednesday slashed its outlook for global economy with Europe set to undergo a recession this year due to uncertainty stemming from sovereign debt crisis, while many developing countries prepare for further economic shocks. The lender now expects the global economy to grow only 2.5 percent in 2012, down from the June prediction of 3.6 percent, according to the latest edition of the Global Economic Prospects 2012. The outlook for 2013 was slashed to 3.1 percent from 3.6 percent.
Euro area is forecast to contract 0.3 percent this year, against June's projection of 1.8 percent growth. The U.S. outlook was cut to an expansion of 2.2 percent this year from 2.9 percent.
The Bank has lowered its growth forecast for developing countries to 5.4 percent in 2012, down from its June estimates of 6.2 percent. For high-income countries, the 2012 growth forecast was cut to 1.4 percent from 2.7 percent.
"Developing countries need to evaluate their vulnerabilities and prepare for further shocks, while there is still time," World Bank's chief economist Justin Yifu Lin said.