According to a recent report by the World Bank, the global economy is expected to grow from its 2.4% growth in 2013 to 3.2% growth in 2014 and 3.4% in 2015. It is expected that this global growth will be led by the developed economies and strong economic conditions in China.
Additionally, the World Bank also warns of economic risks that could hinder the possible economic growth. The World Bank claims that economic conditions in the US, weakening economic performance in the euro zone, or possible negative economic effects of recent Chinese restructuring economic policies could pose as a threat to global growth.
Furthermore, the World Bank also analyzes economic growth in each region of the world or specific countries. For the US, the World Bank approves of the Federal Reserves decision to ease quantitative easing. For Japan, it warns that economic structural reforms will be needed. It warns that the banking sector remains weak in the euro zone. Lastly, it states that developing country growth in 2013 was 4.8% with economic growth in East Asia and Latin America to be flat and modest respectively, and in the Middle East, economic growth will not be positive due to social conditions of that region.
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ReplyDeleteThe World Bank’s finding seems a little too absurd to project a significant growth in the world’s economy. Perhaps there was a major or minor change in the quantity of dollars flowing into the financial sectors of the world, but this doesn’t necessary mean that the economy is improving. The World Bank needs to look at the inflation rate, unemployment, and government deficits of the world to truly project if the world economy is picking up. It is expected that this global growth will be led by the developed economies and strong economic conditions in China. However, I think this global growth will benefit countries with resources to trade while the rest of the countries will have little to no significant change in their economy.
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DeleteI have not seen the actual report by the World Bank, but do you actually know if the World Bank's report mentions some of the factors you include, such as inflation rate, unemployment, or government deficits? I would argue that some of these conditions are strong or have been improving. At least in the United States, the annual inflation rate for 2013 was 1.5%. Also, unemployment has gone down in the US to 6.7%. Of course, this doesn't mention if people were simply leaving the work force or not, but it does show a trend of decreasing unemployment in one country. This is just one country, but there are other positive trends occurring. For example, it is expected that Chinese GDP growth will slow down this year, but due to their restructuring policies, it may be possible to see stronger GDP growth in China for the future. Regardless, China is also doing well with GDP growth expected to be above 7% for 2014. These are just two countries, but I am not as skeptical about the World Bank's report.
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ReplyDeleteI think it would be interesting to see how the World Bank's predictions play out, especially with a recent report regarding Eurozone recovery "gathering pace" since the Eurozone was identified as one of the possible threats to growth of the global economy. Based on January's report, it showed that the PMI for the Eurozone rose from 52.1 in December to 53.2 in January, with figures above 50 indicating expansion.
ReplyDeleteIt will be interesting. If we're going to analyze the World Bank's predictions, we also should look at current conditions of other countries outside of the Eurozone. At least in the United States, manufacturing PMI has changed from 53.7 to 55.0. This is a small growth of about 2% per quarter, which is similar to the growth we have seen in before. Although, I will admit that these figures are not the best predictors for the rest of 2014, but at current growth we are seeing now, it doesn't look too impressive.
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