Bad weather in the US, tension in the Ukraine, the slowdown in China and political strife in countries such as Turkey will all delay an expected pick-up in activity, the bank said in its half-yearly Global Economic Prospects.
Its president, Jim Kim, expressed disappointment at the prospect of a third straight year of sub-5% growth in the developing world, which he said was insufficient to meet his aim of eradicating extreme poverty by 2030.
"Growth rates in the developing world remain far too modest to create the kind of jobs we need to improve the lives of the poorest 40%," Kim said.
"Clearly, countries need to move faster and invest more in domestic structural reforms to get broad-based economic growth to levels needed to end extreme poverty in our generation."
The bank expects the global economy to grow by 2.8% compared with the 3.2% predicted in January. Developing country expansion has been revised down from 5.3% to 4.8%, while expansion in high-income countries has been shaved from 2.2% to 1.9%.
After a sluggish start to 2014, the bank expects activity to accelerate during the rest of the year and for global growth to be 3.4% in 2015 and 3.5% in 2016. A stronger performance by the US and a slow recovery in the eurozone are expected to help developing countries by acting as markets for their exports.
However, the bank remains concerned about a number of factors that could hit the developing world – financial turmoil prompted by an end to the heavy doses of financial stimulus used by central banks over the past five years; the possibility of a hard landing in China, and the vulnerability of some emerging market economies.
Privately, it is worried that economic policy has remained loose for so long and that pressure to start returning policy to a more normal setting will become stronger if advanced countries pick up speed over the next year.
"Markets remain skittish and speculation over the timing and magnitude of future shifts in high-income macro policy may result in further episodes of volatility. Also, vulnerabilities persist in several countries that combine high inflation and current account deficits – Brazil, South Africa and Turkey."
The bank added that the budgets of developing countries had worsened significantly since the financial crisis began in 2007. "In almost half of developing countries, government deficits exceed 3% of gross domestic product, while debt-to-GDP ratios have risen by more than 10 percentage points since 2007.
"Fiscal policy needs to tighten in countries where deficits remain large, including Ghana, India, Kenya, Malaysia and South Africa."
The bank said countries needed to spend wisely rather than spend more, diverting money from subsidies to investment in education, training and infrastructure. Andrew Burns, the lead author of the report, said bottlenecks were holding back the economies of many middle-income countries.
UK manufacturing up
Britain's economy has finally broken through its pre-recession peak. After official data on Tuesday showed the manufacturing recovery continuing, the National Institute of Economic and Social Research has estimated that GDP grew by 0.9% in the three months to May.
"By this estimate, the level of UK GDP has surpassed its pre-recession peak, and is approximately 0.2% above where it was in January 2008," it said.
The assertion follows a recent prediction from NIESR that an end to the "great recession" was nearing but at the time its director, Jonathan Portes, cautioned that individuals would not necessarily feel better off. GDP per head was well below the 2008 level and would not recover "for a couple of years," he said.
News that the manufacturing sector had enjoyed its strongest annual growth for more than three years buoyed hopes that recovery is broadening beyond consumer spending.
The Office for National Statistics said manufacturing output rose 0.4% in April on the month before, leaving it up 4.4% on the year. That drove a pick-up for the wider industrial sector, which also includes utilities, mining and waste management.
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