The World Bank has lowered its global growth forecast for 2015 and next year due to disappointing economic prospects in the euro zone, Japan and some major emerging economies. Ciara Lee asks what's going wrong when low oil prices should be boosting the economy.
Record low oil prices should stimulate growth - but the World Bank says they're not having much impact yet. It's lowered its global growth forecast for 2015 and next year. Economic concerns in Japan and some major emerging economies are partly to blame. So too are deflation fears in the euro zone. Kathleen Brooks is from Forex.com (SOUNDBITE) (English) KATHLEEN BROOKS, DIRECTOR OF RESEARCH AT FOREX.COM, SAYING: "Deflation means no growth, that's what we've seen in the past. It's a real curse on an economy, and the euro zone is now in deflation and it's going to be very difficult to get out of it. Low growth is kind of what the market is expecting for the next few years." Russia and Brazil are particular concerns. The Bank predicts the world economy will only grow by 3 percent this year, instead of 3.4 percent. And by 3.3 percent in 2016, rather than 3.5. The Bank expects oil prices to stay low this year. But it says it could be several years before they feed into its outlook. (SOUNDBITE) (English) KATHLEEN BROOKS, DIRECTOR OF RESEARCH AT FOREX.COM, SAYING: "I think the World Bank have made probably the right decision by cutting global growth forecasts, because a lot of the economies could actually be pushed into default on the back of this issue, where oil prices are so reliant on their oil revenues. If they are not coming in, and they've fallen so sharply, and it looks like oil prices are going to remain low for a long time, that could really be a threat for some really large economies in the world." Strong growth prospects in the United States and Britain separated them from other rich nations. And while oil importing countries in particular are likely to benefit from the low prices - there is a downside. Depressed inflation is already have an impact in Europe and Japan.