What the World Bank Is Doing
Updated June 2015
The world is still feeling the effects of the 2008 financial crisis. While economic recovery is gaining momentum in high-income countries, risks to the outlook for emerging and developing economies are weighing on global growth.
Developing countries, which have been the engine of global growth since the crisis, will likely grow by 4.4% in 2015 -- marking a fourth consecutive year of disappointing economic growth, according to the June 2015 edition of Global Economic Prospects.
The report said developing countries are facing a series of challenges in 2015, including the looming prospect of the U.S. federal Reserve’s first rise in interest rates since the crisis, and higher borrowing costs. At the same time, lower prices for oil and other commodities have intensified the slowdown in developing countries, and have so far been slow to spur economic activity in oil importers, said the report.
The global economy is expected to grow by 2.8% in 2015, down from the 3.0% projected last January; it is projected to rise to 3.3% in 2016 and dip to 3.2% in 2017. The Bank Group projects growth in developing countries will pick up in 2016 and 2017 to 5.2% and 5.4%, respectively.
The World Bank Group and the international community are assisting developing countries on several fronts to help safeguard growth and accelerate the fight against poverty.
The Bank Group committed $61 billion in loans, grants, equity investments, and guarantees to promote economic growth, increase shared prosperity, and fight extreme poverty in developing countries in fiscal year 2014, which ended June 30, 2014.
The World Bank’s fund for the poorest countries, the International Development Association, committed $22.2 billion in FY14, up from $16.3 billion in FY13. In December 2013, a global coalition of developed and developing countries committed to replenish the fund with a record $52 billion in financing over three years.
To boost employment, the Bank sharply increased lending and grant financing for jobs-related programs, from an annual average of $477 million in 1998–2008 to $634 million annually from 2009–11. In fiscal 2013, the Bank invested more than $3 billion in social protection and labor programs; it manages an $11.9 billion portfolio with 172 operations in 85 countries.
The World Bank is the largest multilateral donor to Aid for Trade, and the active portfolio in trade-related assistance consists of $12.4 billion in fiscal 2013, up from $2.8 billion in 2003.The World Bank is also helping countries build resilience to external shocks associated with market volatility and natural disasters by facilitating access to market-based risk management tools and capital market solutions.
Early Response to the Crisis
The 2008 financial crisis, coming on the heels of the food and fuel crises, resulted in sharp reductions in global growth, trade, and access to finance for developing countries.
The World Bank Group responded with record amounts of financing for education, health, nutrition, and infrastructure in developing countries, committing more than $189 billion between 2008 and the end of fiscal year 2011.
The Bank Group’s commitments for social protection for the poorest and most vulnerable — including school feeding and cash transfer programs, such as Mexico’s Oportunidades — reached more than $9 billion in 72 countries during fiscal years 2009-2011. That figure is seven times the pre-crisis level of $1.2 billion.
To boost food security, the Bank has increased annual financing for agriculture to $6 billion to $8 billion a year, up from $4.1 billion in 2008. Agriculture commitments in FY13 reached $8 billion.
The Global Agriculture and Food Security Program (GAFSP), launched by the Bank in April 2010 to assist the G20’s support for agriculture and food security, provides pooled donor grant resources to finance country-led investment plans; as of October 2013, some $1.3 billion has been pledged to finance public and private sector projects in 25 countries.
The Bank also increased support to the drought-stricken Horn of Africa in FY11 to $1.88 billion; the Bank’s fund for the poorest countries contributed $30 million to support the United Nations High Commissioner for Refugees’ delivery of emergency services to Somali refugees at camps in Kenya and Ethiopia.