http://money.cnn.com/2014/10/07/news/economy/economy-imf-outlook/
It is predicted that the world economy will grow by just 3.3% in 2014
and by 3.8% in 2015 which is hardly any difference from the growth in
previous years. Many countries are still trying to handle the legacy of
the global financial crisis.
In Europe for example,
unemployment is so high it is almost about to reach a new record. The
debt of advanced economies is also rising which just shows how the
future expectations of economic growth.
Germany for
example, is about to reach its third recession since 2008 leading to a
weaker demand for its exports. In August the German industrial
production fell just to 4%.
IMF has also said that shaved off 0.2% for the economic growth predicted for 2015.
While these figures may at first glance appear disappointing, it is important to remember that when it comes to growth, small changes have a big impact over time. Even growth in the tiniest of amounts will have lasting effects on living standards in the long run. If we can get these growth rates to increase by even a small amount, it could result in huge improvement several years down the road.
ReplyDeleteIt is not necessarily a bad thing that the world economies growth rate has been constant over the last several years. The United States grows on average around 2%, so other countries around the world are growing at a faster rate. It seems like many of the countries that have larger economies in the article are beginning to slow their growth rate. I think that some of the poorer countries are the ones that are now growing faster than the large economies. It would be interesting to see what the real and nominal inflation rates of the economies are as well.
ReplyDeleteI agree with Ally. Even a small increase in growth can have a large impact over time. We examined this in our notes on Long Run Growth. A 2.0% in annual growth rate of income per capita led to a 624.5% increase in standard of living after 100 years.
ReplyDeleteI also feel any small increase in growth will have significant impacts in the long run. Although the developed nations are growing at a slower rate, the developing countries in the world are growing relatively faster. Any increase in the magnitude of economic growth will not only enhance living standards by enabling an increase in resources for education and health care, but will also help the governments that suffered from a recession to slowly improve their budget deficits as well.
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