ABOUT CONTACTS RUSSIAN
MAIN NEWS REVIEWS STATISTICS ARTICLES LINKS

Global Economy Reviews

19.12.2019 15:10 World Economy Review - November 2019

The OECD trimmed its 2020 global economic growth forecast and said it did not see a strong rebound in 2021 owing to risks stemming from trade tensions.

The Paris-based Organization for Economic Co-operation and Development now estimates that business activity around the world will expand by 2.9 per cent next year, a decline of 0.1 percentage points from a previous forecast issued in September.

In 2021, the OECD, which groups the world`s wealthiest nations, sees global economic growth edging back up to 3.0 per cent, according to its November 2019 Economic Outlook.

OECD chief economist Laurence Boone noted that "for the past two years, global growth outcomes and prospects have steadily deteriorated, amidst persistent policy uncertainty and weak trade and investment flows."

She said that while central banks had taken decisive and timely monetary decisions that partly offset negative effects of trade tensions, most governments had not done so on a fiscal level, for example by investing in long-term projects to improve infrastructure, advance digitalization of their economies and limit climate change.

Owing to "persistent policy uncertainty and weak trade and investment flows," she said the OECD now saw the global economy expanding at "the weakest rate since the global financial crisis" erupted in 2007.

The US economy, the world`s biggest, "is expected to slow to 2.0 percent by 2021, while growth in Japan and the euro area is expected to be around 0.7 and 1.2 percent respectively."

In China, the second biggest economy worldwide, growth was forecast to "continue to edge down, to around 5.5 percent by 2021," Boone said. Other emerging-market economies are expected to recover "only modestly," she added.

full version...

15.10.2019 14:48 World Economy Review - September 2019

The global economy may weaken to a pace not seen since the financial crisis as the impact of the Trump administration`s trade war and Brexit erode confidence and investment, the Organisation for Economic Cooperation and Development said in a report.

Global economic growth is likely to slow to 2.9% in 2019 and 3% in 2020, the weakest annual growth rates since the 2008 financial crisis, the economic research organization said. The trade war between the U.S. and China as well as other trade tensions are "endangering future growth prospects," the group added.

Economic growth in the U.S. will slow to 2% next year, the OECD forecast. By comparison, the Trump administration has targeted 3% annual GDP growth.

The OECD`s latest outlook is a downgrade on the group`s 2018 forecast that global economic growth would reach 4% in 2019, OECD chief economist Laurence Boone wrote in a blog post. Trade disputes between the U.S. and China, Europe and other countries is causing some businesses to hold off on investing in new equipment or hiring, while U.S. manufacturing has fallen into recession despite President Donald Trump`s vows to revive the sector.

"An urgent response is required, failing which we run the risk of finding ourselves stuck in a long period of low growth, the brunt of which will be felt primarily by the most vulnerable," Boone wrote.

The outlook for economic growth has been revised downward for almost all G20 countries, the OECD said. The G20 includes the EU and 19 other countries, including the U.S., Canada and Mexico.

The trade war between the U.S. and China will "exert a significant drag on global activity and trade over the next two years," the report noted.

"All told, the U.S.-China measures could reduce global GDP growth by between 0.3-0.4 percentage points in 2020 and 0.2-0.3 percentage points in 2021," the report forecast. "China and the United States would be most affected by these shocks."

full version...

16.08.2019 21:51 World Economy Review - July 2019

A sharp deceleration of global trade driven by ongoing trade tensions is slowing the global economy more than earlier projections, according to the latest forecasts of the International Monetary Fund.

Real global economic growth will slow to 3.2% this year, 0.1 percentage point slower than forecast in April, and down from 3.6% last year and 3.8% in 2017, according to the quarterly update to the IMF`s flagship World Economic Outlook.

The slowdown in growth and downgrade in the forecast reflect the ongoing fallout from trade tensions. Since the IMF`s last round of forecasts in April, three more months of data have confirmed weaker growth in much of the world, while tariffs escalated between the U.S. and China during a two-month breakdown in negotiations.

Global trade has decelerated rapidly during the ongoing trade tensions. The IMF now projects world trade will grow 2.5% in 2019, a downgrade of nearly a full percentage point in the forecast since April. Earlier forecasts had anticipated a slowdown, but not this sharp. As recently as 2017, global trade in goods and services was growing at a robust 5.5%.

Global growth is sluggish and precarious, but it does not have to be this way because some of this is self-inflicted, said Gita Gopinath, the IMF`s chief economist.

Dynamism in the global economy is being weighed down by prolonged policy uncertainty as trade tensions remain heightened despite the recent U.S.-China trade truce, she said, referring to an agreement in late June between President Trump and China`s President Xi Jinping to return to negotiations after two months of escalating tariffs.

She also cited risks to the economy from tensions over technology companies, and the prospect of a disorderly Brexit if the U.K. leaves the European Union without agreeing to a deal with the bloc.

The downgrades in growth were largely concentrated in emerging markets, with growth in India down 0.3 percentage points from earlier forecasts, Russia down 0.4 points, Mexico down 0.7 points and Brazil down 1.3 points.

Advanced economies fared relatively better in this round of forecasts. The U.S. and euro area are expected to grow more slowly than in 2018, but the U.S. slowdown is now forecast to be less pronounced than in the April round of forecasts while Europe`s outlook was unchanged.

The IMF`s outlook, which now reflects data through mid-July, adds to evidence that trade tensions are continuing to ripple around the world.

A separate report from the World Trade Organization, released on Monday, showed the extent to which trade protectionism has continued to increase. The WTO said in its mid-year monitoring report that, since October, trade restrictions were applied to approximately $340 billion a year of trade.

Those new trade restrictions were the second-highest figure on record, surpassed only by the $588 billion in restrictions reported in its previous monitoring report. Together, these two periods represent a dramatic spike in the trade coverage of import-restrictive measures, said the WTO, which counts tariffs, import bans, special safeguards, import taxes and export duties among the restrictions that it tracks.

full version...

25.06.2019 19:22 World Economy Review - May 2019

The World Bank downgraded its forecast for the global economy in light of trade conflicts, financial strains and unexpectedly sharp slowdowns in wealthier countries.

The bank, an anti-poverty agency, expects the world economy to grow 2.6% this year. That would be the slowest calendar-year growth since 2016, and it is down from the 2.9% expansion the agency forecast in January.

The World Bank downgraded every major region of the world, though it kept its 2019 forecast for U.S. growth at 2.5%. In the 19 countries that use the euro currency, growth is forecast to slow to 1.2%, down from 1.8% last year and the 1.6% the World Bank expected in January.

Slowed by the Trump administration`s trade war with China, global trade is expected to expand just 2.6% this year, the weakest pace since the 2008 financial crisis.

The Trump administration and Beijing have imposed tariffs on hundreds of billions of dollars of each other`s imports in a clash over China`s drive to overtake American technological dominance. Their showdown has generated uncertainty for businesses that must decide whether and where to make investments, buy supplies and establish factories.

We are not pushing the panic button yet, said Ayhan Kose, a World Bank economist. But we are sending a message of a possibly deeper slowdown if trade hostilities persist.

This is high time for policymakers to find ways to resolve their differences, Kose said.

China, the world`s second-largest economy after the U.S., is forecast to grow 6.2%, which would be its weakest performance since 1990, when it was enduring the aftermath of a violent crackdown on pro-democracy protesters at Tiananmen Square.

The Japanese economy is predicted to eke out 0.8% growth, same as last year.

The Russian economy will grow by 1.2 percent in 2019, the World Bank said in at least the third downgrade. The Washington-based institution previously downgraded its forecast of Russia`s growth from 1.8 percent to 1.5 percent in early 2019, then again to 1.4 percent in April.

Its latest revision - made in the twice-yearly Global Economic Prospects report - is still more optimistic than Russia`s own projection of 0.8 percent.

Real GDP growth exceeded expectations in 2018, reaching 2.3 percent despite international sanctions. The bank had said the rise was largely due to "one-off effects in [non-residential] construction" and the football World Cup that Russia hosted last summer.

The World Bank still projects the Russian economy to grow by 1.8 percent next year and in 2021.

full version...

26.05.2019 17:45 World Economy Review - April 2019

Yes, yes, we normally think of a recession as being negative growth. More formally, two quarters or more of negative economic growth. The pile of everything being produced by everyone goes down.

However, while this is true it`s not entirely useful when we consider the global economy. There a reasonable rule of thumb is that less than 3% growth is that recession:

It sounds a bit odd to be describing near 3% global GDP growth as being recession levels most rich countries would kill for that sort of growth rate maintained over the years. Do note that we`re talking of real growth here, this is after inflation is deducted. Still, a useful rule of thumb is that for global growth something less than 3% is what we should be describing as a recession.

This isn`t an official declaration, rather a general rule of thumb used by the World Bank, OECD and IMF. Global growth of less than 3% is recessionary. The reason being that growth in poor countries should be note should a lot easier than that in rich. Rich places are already at the technological frontier. To get more growth people have to go work out how to do it.

Poor countries by contrast aren`t, by definition, at that technological frontier. They`re not doing everything in the modern and efficient manner that`s why they`re poor. So, their growth is a lot easier. Go copy quite literally what the rich countries are doing and there you have it, growth. Poor countries should be growing faster than rich and that`s what means that global growth should be up above 3% whatever else is happening. If it isn`t then we can say that we`re in something akin to a recession even though the actual definition, falling economic output, isn`t being met.

Not hugely important of course, just one of those little things that makes up the world`s rich tapestry.

full version...


: [1][2][3][4][5][6][7][8][9][10][11][12][13][14][15][16][17][18][19][20][21][22][23][24][25][26][27][28][29][30][31][next]

The Economic Articles

Economic Indicators