World Bank Group’s Global Economic Prospects GEP report highlights that following another disappointing year in 2014, developing countries should see an uptick in growth this year, boosted in part by soft oil prices, a stronger US economy, continued low global interest rates, and receding domestic headwinds in several large emerging markets

WB GEP report predicts “After growing by an estimated 2.6% in 2014, the global economy is projected to expand by 3% in 2015, 3.3 percent in 2016 and 3.2% in 2017. Developing countries grew by 4.4% in 2014 and are expected to edge up to 4.8% in 2015, strengthening to 5.3% and 5.4% in 2016 and 2017, respectively.”

Underneath the fragile global recovery lie increasingly divergent trends with significant implications for global growth. Activity in the United States and the United Kingdom is gathering momentum as labor markets heal and monetary policy remains extremely accommodative. But the recovery has been sputtering in the Euro Area and Japan as legacies of the financial crisis linger. China, meanwhile, is undergoing a carefully managed slowdown with growth slowing to a still robust 7.1% in 2015 this year (7.4% in 2014), 7% in 2016 and 6.9% in 2017. And the oil price collapse will result in winners and losers.

On the back of gradually recovering labor markets, less budget tightening, soft commodity prices, and still low financing costs, growth in high-income countries as a group is expected to rise modestly to 2.2% in 2015 (from 1.8% in 2014) in 2015 and by about 2.3% in 2016-17. Growth in the United States is expected to accelerate to 3.2% this year (from 2.4% last year), before moderating to 3% and 2.4% in 2016 and 2017, respectively. In the Euro Area, uncomfortably low inflation could prove to be protracted. The forecast for Euro Area growth is a sluggish 1.1% in 2015 (0.8% in 2014), rising to 1.6% in 2016-17. In Japan, growth will rise to 1.2% in 2015 (0.2% in 2014) and 1.6% in 2016.

Amongst large middle income countries that will benefit from lower oil prices is India, where growth is expected to accelerate to 6.4 % in 2015 (from 5.6% in 2014), rising to 7% in 2016-17. In Brazil, Indonesia, South Africa and Turkey, the fall in oil prices will help lower inflation and reduce current account deficits, a major source of vulnerability for many of these countries.

However, sustained low oil prices will weaken activity in exporting countries. For example, the Russian economy is projected to contract by 2.9% in 2015, getting barely back into positive territory in 2016 with growth expected at 0.1%.

It said “Risks to the outlook remain tilted to the downside, due to four factors. First is persistently weak global trade. Second is the possibility of financial market volatility as interest rates in major economies rise on varying timelines. Third is the extent to which low oil prices strain balance sheets in oil producing countries. Fourth is the risk of a prolonged period of stagnation or deflation in the Euro Area or Japan.”

However Mr Kaushik Basu Chief Economist and Senior Vice President of World Bank said “The lower oil price, which is expected to persist through 2015, is lowering inflation worldwide and is likely to delay interest rate hikes in rich countries. This creates a window of opportunity for oil-importing countries, such as China and India; we expect India’s growth to rise to 7% by 2016. What is critical is for nations to use this window to usher in fiscal and structural reforms, which can boost long run growth and inclusive development.”