Publication: Global Economic Prospects, January 2024
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Date
2024-01-09
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1014-8906
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2024-01-09
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Note: Chart 1.2.B has been updated on January 18, 2024. Chart 2.2.3 B has been updated on January 14, 2024. Global growth is expected to slow further this year, reflecting the lagged and ongoing effects of tight monetary policy to rein in inflation, restrictive credit conditions, and anemic global trade and investment. Downside risks include an escalation of the recent conflict in the Middle East, financial stress, persistent inflation, weaker-than-expected activity in China, trade fragmentation, and climate-related disasters. Against this backdrop, policy makers face enormous challenges. In emerging market and developing economies (EMDEs), commodity exporters face the enduring challenges posed by fiscal policy procyclicality and volatility, which highlight the need for robust fiscal frameworks. Across EMDEs, previous episodes of investment growth acceleration underscore the critical importance of macroeconomic and structural policies and an enabling institutional environment in bolstering investment and long-term growth. At the global level, cooperation needs to be strengthened to provide debt relief, facilitate trade integration, tackle climate change, and alleviate food insecurity.
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“World Bank. 2024. Global Economic Prospects, January 2024. © World Bank. http://hdl.handle.net/10986/40715 License: CC BY 3.0 IGO.”
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Publication Global Economic Prospects, January 2010(World Bank, 2010)The world economy is emerging from the throes of a historically deep and synchronized recession provoked by the bursting of a global financial bubble. The consequences of the initial bubble and the crisis have been felt in virtually every economy, whether or not it participated directly in the risky behaviors that precipitated the boom-and-bust cycle. And while growth rates have picked up, the depth of the recession means that it will take years before unemployment and spare capacity are reabsorbed. This year's global economic prospects examines the consequences of the crisis for both the short and medium term growth prospects of developing countries. It concludes that the crisis and the regulatory reaction to the financial excesses of the preceding several years may have lasting impacts on financial markets, raising borrowing costs and lowering levels of credit and international capital flows. As a result, the rate of growth of potential output in developing countries may be reduced by between 0.2 and 0.7 percentage points annually over the next five to seven years as economies adjust to tighter financial conditions. Overall, the level of potential output in developing countries could be reduced by between 3.4 and 8 percent over the long run, compared with its pre-crisis path. The report further finds that the very liquid conditions of the first half of the decade contributed to the expansion in credit available in developing countries and that this expansion was responsible for about 40 percent of the approximately 1.5 percentage point acceleration of the pace at which many developing-country economies could grow without generating significant inflation. 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Although the major risks to the global economy are similar to those of a year ago, the likelihood that they will materialize has diminished, as has the magnitude of estimated impacts should these events occur. Major downside risks include the loss of access to capital markets by vulnerable Euro Area countries, lack of agreement on U.S. fiscal policy and the debt ceiling, and commodity price shocks. In an environment of slow growth and continued volatility, a steady hand is required in developing countries to avoid pro-cyclical policy and to rebuild macroeconomic buffers so that authorities can react in the case of new external or domestic shocks.Publication Global Economic Prospects, January 2011(Washington, DC, 2011-01)Economic activity in most developing countries has, or is close to having, recovered. Supported by resurgence in international and domestic financial flows and higher commodity prices, most of the spare capacity in developing countries that was created by the crisis has been reabsorbed, and developing countries have regained trend growth rates close to those observed in the pre-crisis period. The remainder of this report is organized as follows. The next section discusses recent developments in global production, trade, and financial markets, and presents updates of the World Bank's forecast for the global economy and developing countries. The global economy is transitioning from the bounce-back phase of the recovery toward a period of slower but more sustainable growth. Growth in most developing countries is increasingly running into capacity constraints, while in high-income and developing Europe and Central Asia growth is hampered by the concentrated nature of slack and ongoing restructuring. In this environment, policy needs to be moving away from short-term demand stimulus toward measures that generate additional employment by enhancing the supply potential of economies. The global policy environment has become highly charged and uncertain, and presents multiple risks to prospects for developing countries. As emphasized at the recent G-20 meetings in Seoul (G-20 2010), both developing and high-income countries will need to take care to minimize the negative external consequences of their domestic policy actions. Concretely, this means that while countries must remain mindful of domestic conditions, when opportunities present themselves to pursue domestic policy objectives in a manner that support adjustment elsewhere in the global economy these should be taken up.Publication Global Economic Prospects, January 2012(Washington, DC, 2012-01)The world economy has entered a dangerous period. Some of the financial turmoil in Europe has spread to developing and other high-income countries, which until earlier had been unaffected. This contagion has pushed up borrowing costs in many parts of the world, and pushed down stock markets, while capital flows to developing countries have fallen sharply. Europe appears to have entered recession. At the same time, growth in several major developing countries (Brazil, India and, to a lesser extent, Russia, South Africa and Turkey) is significantly slower than it was earlier in the recovery, mainly reflecting policy tightening initiated in late 2010 and early 2011 in order to combat rising inflationary pressures. As a result, and despite a strengthening of activity in the United States and Japan, global growth and world trade have slowed sharply.Publication Global Economic Prospects, June 2011(2011-06)The global financial crisis is no longer the major force dictating the pace of economic activity in developing countries. The majorities of developing countries has, or are close to having regained full-capacity activity levels. As a result, country-specific productivity and sartorial factors are now the dominant factors underpinning growth. Macroeconomic policy in developing countries needs to turn toward medium-term productivity enhancements, managing inflationary pressures re-establishing the fiscal and monetary cushions that allowed most developing countries to come through the crisis so well. In contrast, activity in high income and some developing European countries continues to struggle with crisis-related problems, including banking-sector, fiscal and household restructuring. The remainder of this report is organized as follows. The next section discusses recent developments in global production, trade, inflation, and financial markets, and presents updates of the World Bank's forecast for the global economy and developing countries. This is followed by a more detailed discussion of some of the risks and tensions in the current environment, and a short section of concluding remarks. Several annexes address regional and sartorial issues in much greater detail.
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