Dhaka: Developing countries face a series of tough challenges in 2015, including the looming prospect of higher borrowing costs as they adopt to a new era of low prices for oil and other key commodities, resulting in a fourth consecutive year of disappointing economic growth this year, says the World Bank Group’s latest Global Economic Prospects (GEP) report, released this week.

As a result, the report says, the developing countries are now projected to grow by 4.4 per cent this year, with a likely rise to 5.2 per cent in 2016, and 5.4 per cent in 2017.

‘Developing countries were an engine of global growth following the financial crisis, but now they face a more difficult economic environment,’ said World Bank Group President Jim Yong Kim.

‘We’ll do all we can to help low- and middle-income countries become more resilient so that they can manage this transition as securely as possible. We believe that the countries that invest in people’s education and health, improve the business environment, and create jobs through upgrades in infrastructure will emerge much stronger in the years ahead. These kinds of investments will help hundreds of millions of people lift themselves out of poverty.’

Growth in South Asia is expected to continue firming to 7.1 per cent this year, led by a recovery in India and supported by a gradual strengthening of demand in high-income countries, said the report.

The decline in global oil prices has been a major benefit for the region, driving improvements in fiscal and current accounts, enabling subsidy reforms in some countries, and the easing of monetary policy.

In India, new reforms are improving business and investor confidence and attracting new capital inflows, and should help raise growth to 7.5 per cent this year.

In Pakistan, remittances are expected to remain solid, and manufacturing and service sectors should continue to recover. However, growth is expected to remain moderate, reflecting ongoing energy constraints.

In the East Asia and Pacific region, growth is expected to ease to 6.7 per cent in 2015 and remain stable over the next two years. This reflects a continued slowdown in China that is offset by a modest pickup in the rest of the region.

A net oil importer, the region is expected to benefit from lower fuel prices, although commodity exporters Indonesia and Malaysia face pressures from lower global prices of oil, gas, coal, palm oil, and rubber.

Growth in China is on course to ease to 7.1 per cent this year. Regional growth (excluding China) is projected to be 4.9 per cent this year, rising to 5.4 per cent by 2016 due to strengthening external demand—notwithstanding slower growth in China, less policy uncertainty in Thailand, and easing domestic pressures elsewhere.

Growth in Europe and Central Asia is expected to weaken further to 1.8 per cent in 2015 as the oil price collapse, geopolitical tensions, and related spillovers, including from Russia, are only partly offset by a moderate recovery in the Euro Area.