The World Bank trimmed its global economic growth outlook on Wednesday, warning that developing markets faced a raft of headwinds ranging from lower commodity prices to the prospect of higher borrowing costs.
The Washington-based lender now expects the world economy to expand 2.8 percent in 2015, down from its January projection of 3 percent, according to its bi-annual Global Economic Prospects (GEP) report. It maintained its growth forecasts for 2016 and 2017 at 3.3 percent and 3.2 percent, respectively.
"Developing countries were an engine of global growth following the financial crisis, but now they face a more difficult economic environment," Jim Yong Kim, group president at World Bank, said in a statement.
It downgraded its 2015 and 2016 growth outlook for developing economies to 4.4 percent and 5.2 percent, from 4.8 percent and 5.3 percent respectively.
Lower prices of oil and other commodities have intensified the slowdown in several developing countries which rely heavily on resource exports, the World Bank said.
Emerging economies are also grappling with weakening exchange rates, triggered by a broad-based appreciation of the U.S. dollar on expectations that the U.S. Federal Reserve will soon begin hiking interest rates.
Currency depreciation has been largest in developing countries with deteriorating growth prospects—most notably commodity exporters—and elevated external vulnerabilities, the report noted.
The Brazilian real and Malaysian ringgit, for example, have tumbled 17 percent and 7 percent against the U.S. dollar this year respectively.