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As a group, developing countries grew much faster than developed economies in calendar 2003, although the accomplishments of individual economies varied widely. Gross domestic product (GDP) per capita in the low- and middle-income countries increased 3.5 percent during the calendar year, more than twice the 1.6 percent average growth rate experienced in high-income countries. Developing countries benefited from the revival of global investment, with capital spending among the group growing 10.8 percent in 2003, more than twice the rate at which it grew in 2002.
The economies of Europe and Central Asia grew 5.5 percent in 2003, up from 4.6 percent the year before. The outlook for 2004 and beyond is for continued robust growth in the region as a whole. GDP in South Asia rose 6.5 percent in 2003, up from 4.3 percent in 2002, with domestic demand providing the impetus for growth. Output in South Asia is expected to grow 7.2 percent in calendar 2004, followed by a period of moderation. At the forefront of the global turnaround in investment are the developing countries of East Asia and the Pacific, which are expected to grow 7.4 percent in 2004, led by continued rapid growth in China.
In contrast with accelerating growth in other developing regions, GDP growth in Africa slowed to 2.4 percent in 2003, down from 3.3 percent in 2002. Over the next two years, the region should be able to accelerate GDP growth toward a range of 4 percent. Doing so will require significant structural reforms—in addition to good weather and greater political stability. Problems of disease and poor infrastructure still represent challenges in the region.
Despite severe disruption in the Middle East and North Africa—tied in large measure to the Iraq conflict—GDP growth jumped from 3.3 percent in 2002 to 5.1 percent in 2003, the strongest economic performance since 1991. Underpinning the growth was a sharp upturn in growth in the region’s oil-exporting economies, which grew 5.7 percent in 2003, up from 3.6 percent in 2002.
Growth recovery in Latin America and the Caribbean has been slower, partly because of uneven performance across countries. Regional GDP advanced 1.3 percent in 2003, following a contraction of 0.6 percent during 2002. The region’s GDP is expected to grow 3.8 percent in 2004. (Figure 5.1 shows GDP per capita by region, 1993 to 2003.)
Growth in developing countries overall is expected to grow 5.4 percent in 2004—the strongest growth in two decades—before easing back toward 5 percent in 2005–06. In this context, the Bank continues to adapt its activities to respond to country needs for lending and advisory services.
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