For the first time in many years, the World Bank’s outlook for the global economy is better than expected rather than worse, with all regions seeing improved growth, according to the forecast released today. However, the bank warns that countries must make investments to improve their growth prospects, and the time to do that is before the next crisis hits, as it inevitably will.
“The big story is a good story. Global growth stronger than what we expected,” World Bank economist Ayhan Kose told AFP, noting that all the forecasts in the Global Economic Prospects report are better than the June edition. Kose, who heads the World Bank’s Development Prospects Group -- which twice a year prepares the global economic forecasts -- notes that the world is seeing “highly synchronised” economic expansion.
That includes solid growth in the “big three” advanced economies -- the United States, the Euro Zone and Japan -- and improvements in the important emerging market economies. In addition, large commodity exporting economies like Russia and Brazil -- that were struggling and saw their economies contract in 2016 -- recovered last year.
Since June, the World Bank has upgraded nearly all of its forecasts, with global economic growth now expected to rise to 3.0 per cent for 2017, three-tenths of a point higher than the prior estimate. Growth is expected to hit 3.1 per cent this year, and 3.0 per cent in 2019. The biggest gains are in advanced economies, which were revised up four-tenths for 2017 and 2018, to 2.3 per cent and 2.2 per cent, respectively. But for 2019 and 2020, those economies are seen slowing to 1.9 per cent and 1.7 per cent, the report said. Euro area growth was revised up 0.7 points to 2.4 per cent in 2017, and another 0.6 points to 2.1 per cent for 2018.
The United States saw a smaller upgrade to 2.3 per cent last year and 2.2 per cent this year, while Japan rebounded to 1.7 per cent in 2017 and an expected 1.3 per cent this year. But the World Bank said its report was “a clarion call for public action” to keep growth from reversing, warning that “the forces depressing potential output growth will continue unless countered by structural policies.” It calls for investments in infrastructure, education and health, and measures to encourage more people, especially women to join the workforce.