The overall acceleration is not stronger because the majority of developing countries have more-or-less fully recovered from the 2008 financial crisis. For many of these countries, current and projected growth is broadly in line with underlying potential growth—leaving little room for acceleration. Thus, GDP in the East Asia & Pacific region is projected to increase 7.3 percent in 2013, but then expand at a broadly stable 7½ percent rate in each of 2014, and 2015. In Latin America, growth is expected to pick up in 2013 to about 3.3 percent, but then to stabilize at just below 4 percent in each of 2014 and 2015. Already, growth in several countries in both regions is being held back by supply-side constraints that are manifesting themselves in inflation, asset-price bubbles, and deteriorating current account balances.
Many countries in Sub-Saharan Africa are also running at, close to, or above potential output, and risk building up inflationary pressures. Growth in the region is projected to firm over the projection period to 4.9, 5.2, and 5.4 percent in 2013, 2014, and 2015, respectively. Growth in South Asia is projected to pick up to 5.2 percent this year, following a very weak 2012 and then to firm only gradually to 6.0 and 6.4 percent in 2014 and 2015 as spare capacity is reabsorbed.
In developing Europe and the Middle East & North Africa, output gaps remain and growth is projected to strengthen
Many countries in developing Europe have still not recovered from the crisis. Unemployment and spare capacity remain high, because activity has been weighed down by banking-sector, household, and fiscal restructuring (much like high-income Europe). As adjustments are completed, growth in the region is projected to strengthen progressively from 2.7 percent last year to 4.2 percent by 2015. Growth in the Middle East & North Africa has been disrupted by political and social tensions and Euro Area weakness. Assuming that tensions in the region gradually ease, growth is projected to slowly strengthen from 2.5 percent in 2013 to 3.5 percent in 2014 and 4.2 percent in 2015.