World markets seen as calmer
The world's top business and political leaders meeting in Davos, Switzerland, maintained a spirit of guarded optimism that the worst of the financial crisis might finally be over, just days after the World Bank lowered its forecast for global economic growth from 3.1 per cent to 2.4 per cent.According to the World Bank's "Global Economic Prospects" report released last week, developing countries' growth in 2013 is expected to be robust at more than 5.5 per cent, but 1-2 percentage points below what it was before the 2008 economic crisis. To regain those growth rates, developing countries will have to look within, by undertaking productivity-enhancing investments in infrastructure, health and education, the GEP said.
Growth in high-income countries has been downgraded from earlier forecasts, at 1.3 per cent for both 2012 and 2013. In the euro area, gross domestic product is now projected to return to growth only in 2014, and is expected to contract by 0.1 per cent this year.
At press time, the International Monetary Fund had not yet released its "World Economic Report".
At the first formal session of the five-day gathering in Davos of the world's top business and political leaders, Min Zhu, deputy head of the IMF, warned that while global markets had calmed significantly in the past year, the world economy was not out of the woods yet.
"At this particular moment, things are much better than 12 months ago. A year ago here, we were really concerned about the euro crisis, the US fiscal cliff," Zhu said.
"With all the policy actions, much has calmed down now but we've got to be very careful. The tail-risk has been moved off the table but there are issues still there."
Jamie Dimon, chief executive of JPMorgan Chase, said the United States was "in pretty good shape" and added that the euro zone had "stabilised" but warned financial crises would continue until better market regulation was in place.
"If we do everything right, we will get out of this. If we don't, this could last another 10 years," said Dimon, one of the world's top bankers.
Leading world bankers are on the defensive amid demands to regulate their industry more closely after a financial crisis that has battered large chunks of the global economy.