In the economic development of a new year beset by an international oil slump and an imploding Eurozone, only the U.S. and India indicated improvement in a revised World Bank 2015 global forecast.

This Washington-based institution for international development has negatively revised its previous 2015 global growth forecast from an overall 3.4% to 3%. The previously unexpected Russian recession, slowing growth of emerging nations, and the somber outlook for the European Community are casting a pall over the world's annual growth.

According to Kaushik Basu, the World Bank's chief economist, "the global economy is being pulled by a single engine, the U.S.A." He further notes that the "Eurozone," (whose members utilize the euro as their national currency) is on the verge of a third recession since the end of the financial crisis (2008-10). The World Bank's chief economist cites the Eurozone's inability to fend off increasing debt, and its becoming less competitive internationally, further endangering its export potential. Consequently, the World Bank has cut the Eurozone's growth outlook from 1.8% to 1.1%.

Growth in "emerging markets," which had been the main force of the post-financial crisis recovery, is exceeding its previously anticipated slowdown. Much of the problem is due to capacity limitation, complicated by internal economic and financial problems, as well as increasing political instability.

This has led the World Bank to cut its emerging nation growth component by half a percentage point to 4.8%. With global interest rates expected to rise this year, this could make the borrowing power needed by these nations' capacity expansion harder to come by.

What may present one of the world's greatest setbacks is a slowdown in China's economic growth from 7.5% to 7.1%. This is likely due to the world's second-largest economy managing a shift away from overall growth, driven by increasing debt and exports to broadening its domestic consumption sector. To prevent an eventual credit bubble, Beijing's leadership is deliberately reducing its own growth rate to 7%, still the largest percentage expansion globally.

What may well be the worst problem undercutting the world economy this year is the unprecedented price drop of oil and, to a lesser extent, natural gas. Large oil importers such as China, Japan, and India are benefitting by much lower commodity prices in general. However, Russia, Iran, Brazil, and Venezuela are facing potential recessions, due to their national budgets being overly dependent on energy revenues to cover their expenditures.

Russia, in particular, is already in recession and has had its 2015 growth rate lowered by the World Bank from 0.9% to a negative 2.9%.


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