On March 4, 2013, Andrew Burns, Manager of Global Macroeconomics in the Development Prospects Group of the World Bank, presented a report – “Global Economic Prospects – Assuring Growth Over Medium Term”, for ISETers. The World Bank's twice-yearly Global Economic Prospects report looks at global growth trends and examines the way those trends affect developing countries. The report includes three-year forecasts for the global economy and long-term global scenarios which look ten years into the future.
The January 2013 report addressed post-crisis trends in global financial markets and real economies. Mr. Burns started his presentation by describing post-crisis trends in the financial markets of developed and developing countries. Four years have passed since the global financial crisis and the high-income world is still struggling – stronger growth remains elusive. The developing world has done better – during 2012 the average growth rate of developing countries was 5.1%, which is high but still lower than pre-crisis rates. Risks have declined but still remain. A steady hand and good policies are required so that authorities can react in the event of new external shocks. Risks remained high during the July 2011 – July 2012 period in the Euro area, which caused a shrinking of capital flows to develop countries. During that period, middle-income regions had the most volatile capital inflows, mainly caused by interest rate volatility on Euro bonds. The situation has improved after the 3rd quarter of 2012. According to the report’s forecast, capital flows to developing countries will remain stable (as a share of GDP) during the next three years.
Mr. Burns continued his presentation by reviewing trends in real economies. After July 2012 industrial production did not grow with higher rates in the developing world (except for China). Such low economic activity can be attributed to uncertainties associated with the elections in the US and disputes between Japan and China over the Senkaku Islands. As for the three-year forecast, GDP growth rates are expected to increase up to 5.5% in the developing world and up to 2.8% in the high-income world. However, those prospects remain vulnerable to a range of external risks including, prolonged fiscal paralysis, contained EU crises, and an abrupt decline in Chinese investment.
ISET would like to thank Mr. Andrew Burns for presenting the report to the ISET community and other interested stakeholders.