Global Economy 'Running On One Engine'

The World Bank has cut its growth forecast for 2015 and next year, declaring that the world's economy is "running on a single engine."

Its twice-yearly Global Economic Prospects report said that weakness in the eurozone, Japan and in some major emerging economies offset the benefit of lower oil prices.

The global development lender predicted the global economy would grow 3% this year - falling from its previous forecast of 3.4% in June last year.

GDP growth would achieve 3.3% in 2016, it predicted.

World Bank chief economist Kaushik Basu said: "The global economy is at a disconcerting juncture.

"The global economy is running on a single engine, ... the American one. "This does not make for a rosy outlook for the world."

The body said strong growth prospects in the United States and Britain separated them from other rich nations.

It warned on the potential impact of deflation in the countries using the euro and in Japan and said that among emerging market economies Brazil and Russia in particular weighed on its predictions.

Russia, which is heavily dependent on oil revenues, is suffering amid a 60% plunge in world oil prices - coupled with sanctions imposed by the West over its actions in Ukraine.

The resulting weakness of the rouble has stoked inflation leaving the country facing the prospect of recession.

Growth has slowed in China but it is more a managed slowdown as it transitions away from an investment-led growth model.

The report said that while lower oil prices should be a  net positive for the world economy, it would increase short-term market volatility and reduce investments in unconventional oil such as shale and deep sea oil.

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