World Bank releases January 2017 Global Economic Prospects report
In its latest report, the World Bank said, immediate withdrawal of a large volume of currency in circulation and subsequent replacement with new notes in November contributed to slowing growth.
World Bank on 10 January 2017 released January 2017 Global Economic Prospects report. The report said that after a post-crisis low 2016, the global economy will accelerate moderately to 2.7 per cent in 2017.
The growth will be carried on because obstacles to activity have moved away in emerging market and developing economy commodity exporters. It says that the obstacles receded when the domestic demand remains solid among emerging and developing commodity. The report also highlights that the growth in advanced economies is expected to edge up to 1.8 per cent in 2017.
The World Bank’s report has decelerated India’s growth to 7 per cent for 2016-17 from its previous estimate of 7.6 per cent. In its report, the bank said the growth rate of the country slowed due to the immediate withdrawal of a large volume of currency in circulation (demonetisation) in November 2016 and subsequent replacement with new banknotes.
In addition to this, the bank said that the country would regain momentum in the following years with 7.6 and 7.8 per cent. It said that several reform initiatives will help in unlocking domestic supply bottlenecks and raise productivity.
According to the report, India maintains the distinction of being the fastest growing emerging market economies of the world, bypassing China.
Highlights/Outlook of the World
East Asia and Pacific: Growth rate in the region was projected to ease to 6.2 per cent due to slowing growth in China which is being moderated by a pickup in the rest of the region.
a) China: The output was anticipated to slow to 6.5 per cent in 2017.
b) Other countries of East Asia and Pacific: The growth in the region will advance at 5 per cent or more in 2017. This growth will be supported by the growth in commodity exporters, while growth in commodity importers was projected to remain broadly stable. The exception will be seen in Thailand where growth is expected to accelerate due to accommodative policies and improved confidence. On the other hand, due to the rise in private investment, growth in Indonesia will pick up to 5.3 per cent in 2017. In the case of Malaysia, the growth will accelerate to 4.3 per cent in the year due to the lower commodity prices eases and commodity prices stabilise.
Note: Growth highlights of Ease Asia Pacific region came with an exclusion of China.
Europe and Central Asia: Growth is projected to pick up to 2.4 per cent in 2017. This growth will be backed by a recovery in commodity-exporting economies and recovery in Turkey.
a) Russia: It is expected to grow at a 1.5 per cent in 2017 and this growth will be backed by its adjustment to low oil prices are completed.
b) Other countries of Europe and Central Asia: Kazakhstan will grow by 2.2 per cent while Azerbaijan is expected to expand 1.2 per cent due to the stabilisation in commodity prices and narrowing of the economic balances. Growth in Ukraine is projected to accelerate to a 2 per cent rate.
Note: The forecast of the report depends on the recovery in commodity prices and an easing of political uncertainty.
Latin America and the Caribbean: The report projects that the region will return to positive growth in 2017 and expand by 1.2 per cent. Brazil will expand at 0.5 per cent and the growth will be supported by the easing of domestic constraints.
Growth in Mexico will decelerate to 1.8 per cent in 2017 due to weakening investment due to policy uncertainty in the United States. Argentina will grow at a 2.7 percent pace in 2017, which will be supported by rolling back of fiscal consolidation as well as policies that are strengthening investment.
Caribbean countries will see a growth at 3.1 per cent in 2017. República Bolivariana de Venezuela continues to suffer from severe economic imbalances and is forecast to shrink by 4.3 per cent in 2017.
The Middle East and North Africa: The report projects that the region will see recover modestly to 3.1 per cent in 2017, with oil importers registering the strongest gains.
Saudi Arabia’s growth will accelerate to 1.6 per cent in 2017 while Iran will see a growth to 5.2 per cent. The forecast is based on an expected rise in oil prices to an average of $55 per barrel for the year.
South Asia: the report suggests that the regional growth is expected to pick up modestly to 7.1 per cent in 2017 with continued support from strong growth in India.
It says that the growth of the region, excluding India is expected to edge up to 5.5 per cent in 2017. This growth will be supported by robust private and public consumption, infrastructure investment and a rebound in private investment.
India is expected to post a 7.6 percent growth rate in Financial Year 2018 as reforms loosen domestic supply bottlenecks and increase productivity.
Pakistan’s growth is projected to accelerate to 5.5 per cent, at factor cost, in FY2018, reflecting improvements in agriculture and infrastructure spending.
Sub-Saharan Africa: The report for the region suggests that Sub-Saharan African growth will pick up modestly to 2.9 per cent in 2017 as the region continues to adjust to lower commodity prices.
Growth in South Africa and oil exporters is expected to be weaker, while growth in economies that are not natural-resource intensive should remain robust. Growth in South Africa is expected to edge up to a 1.1 per cent pace in 2017.
Nigeria will rebind from the recession and grow at a 1 per cent pace, while Angola will expand at a 1.2 per cent pace.