Oil,food prices brake global growth: WB

Rising food and fuel prices are taking the wind out of the global economy's recovery this year.

Rising food and fuel prices are taking the wind out of the global economy8217;s recovery this year,the World Bank has said,cutting its forecast for global growth.

The Bank projected said global growth will only be 3.2 per cent in 2011,a 10th point lower than its January estimate and sharply off the 3.8 per cent pace of 2010.

The Washington-based development lender expected in its biannual Global Economic Prospects report that the world economy would rebound in 2012.

8220;But further increases in already high oil and food prices could significantly curb economic growth and hurt the poor,8221; said Justin Lin,the Bank8217;s chief economist.

High-income countries at the nexus of the 2008-2009 global financial crisis were still struggling to recover.

Growth would slow from 2.7 per cent in 2010 to 2.2 per cent in 2011,slower than the previous 2.4 per cent estimate.

The rich countries 8220;have the largest amount of restructuring to do,8221; said Andrew Burns,lead author of the report,at a news conference at the Bank8217;s Washington headquarters on Tuesday.

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Burns said the US was in 8220;a growth pause8221; but a double -dip recession was 8220;not likely8221; 8211; echoing US President Barack Obama8217;s statement earlier yesterday that he was 8220;not concerned about a double-dip recession.8221;

The world8217;s biggest economy was expected to grow a feeble 2.6 per cent this year and accelerate to 2.9 per cent in 2012,the Bank said.

Japan8217;s March 11 earthquake-tsunami disaster and unrest in the Arab world,while cutting sharply into domestic growth,would make only a modest dent in global growth,the 187-nation institution said.

The disaster interrupted Japan8217;s supplies of key parts and materials to global industries,especially the auto and electronics industries,while political turmoil in the Middle East and North Africa region affected those economies and pushed oil prices higher.

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Libyan oil output,which has dwindled to a trickle amid a pro-democracy revolt,accounted for about USD15 to USD20 of the roughly USD30 increase in oil prices from December to their February peak,Burns said.

The recovery in Europe continues to face 8220;substantial headwinds8221; from uncertainty about debt crises in several eurozone members. The 17-nation eurozone is expected to expand at the 2010 pace of 1.7 per cent this year,with growth only edging up to 1.8 per cent in 2012.

By contrast,developing countries relatively sailed through the global downturn,providing the impetus for the global recovery.

But at the same time their robust growth was creating the demand for commodities that has spurred prices higher.