News / Africa

World Economy Remains Fragile

World Bank Senior Economist Allen Dennis (World Bank).
World Bank Senior Economist Allen Dennis (World Bank).

Multimedia

Audio
  • Listen to De Capua report on global economic prospects

Joe DeCapua
The World Bank says four years after the start of the financial crisis, the global economy remains fragile. Growth in high-income countries remains weak. The bank recommends that developing countries not wait for rich nations to rebound, but take their own measures to ensure economic growth.


The latest Global Economic Prospects report says economic recovery is not just fragile, it’s uncertain. World Bank President Jim Yong Kim says that “clouds the prospect for rapid improvement and a return to more robust economic growth.”

Senior economist Allen Dennis, who helped write the report, said, “In 2012, growth was still at about 2.3 percent. And that is relatively subdued compared to its pre-crisis average.”

The World Bank does not expect a surge in economic growth this year.

“We still have somewhat modest and subdued growth even for 2013 at about 2.4 percent. So, we certainly are in a period of both volatile and subdued growth. And in part that is because of the economic challenges that several of the high-income countries are facing,” said Dennis.

The economic decisions made in the United States and Europe could easily affect the world recovery. Debates and negotiations continue over debt and spending cuts and whether reductions could cause another recession.

“The greatest drag to the global economy is actually coming from the Euro area and, in part, it’s having to do with necessary and important fiscal adjustment issues there,” he said.

But Dennis said that heated debate over whether to raise the U.S. debt ceiling has already affected economic growth in the United States and developing countries. The debt ceiling must be raised for the U.S. government to pay its bills. If it’s not, the U.S. defaults and that can deal a major blow to its financial standing and credit rating. Nevertheless, it’s a bargaining chip in budget talks.

“Our assumption is that the authorities will come to some settlement of some sort. Within our baseline projections we don’t assume a severe fiscal adjustment or contraction in the United States. So, in other words, we assume that it’s going to be extended over a longer period of time, rather than everything being done within a short period,” he said.

During the last four years, developing countries, especially those in sub-Saharan Africa, have been the economic bright spot. They’ve demonstrated resilience to much of the turmoil. The World Bank says it’s because of the fiscal and monetary policies they’ve put in place.

However, those policies are short-term solutions. Dennis said that certain structural policies must be implemented for the long-term. They’re needed, he said, to sustain growth and make developing countries more competitive in a global economy.

“By structural policies I’m referring to investments in education and their citizens – referring to continued opening of trade and investment linkages both among themselves – that is, developing countries – but also with the high-income countries,” said Dennis.

While Europe remains Africa’s largest trading partner, African countries have started to expand their reach.

“Ten or fifteen years ago, sub-Saharan Africa was exporting over 40 percent of its goods to Europe. Now it’s probably exporting less than 25 percent. So, that makes it less vulnerable,” he said.

The World Bank expects an overall five-percent economic growth rate in sub-Saharan Africa this year. However, not all countries in the region will see such growth. Those affected by political instability, conflict, labor disputes or major weather-related problems could see much less.

Also, the World Bank says, “While economic output of developing countries has accelerated,” it is still being “held back by weak investment and industrial activity in advanced economies.”

You May Like

Karzai's Legacy: Missed Opportunities?

Afghanistan's president leaves behind a much different nation than the one he inherited, yet his legacy from 13 years in power is getting mixed reviews More

Video Secret Service Chief Under Fire for White House Security Breach

Julia Pierson faces tough questions from lawmakers after recent intrusion at White House, says: 'It is clear that our security plan was not executed properly' More

Frustrated, Liberian Students Want Ebola Fight Role

Thousands have volunteered to go to counties, rural villages to talk to people in their language about deadly virus More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Malaysia Struggles to Stop People Joining Jihadi
X
Mahi Ramakrishnan
September 30, 2014 2:16 PM
Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Malaysia Struggles to Stop People Joining Jihad

Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Could US Have Done More to Stop Rise of Islamic State?

President Obama says airstrikes against Islamic State militants in Syria will likely continue for some time because, in his words, "there is a cancer that has grown for too long." So what if President Obama had acted sooner in Syria to arm more-moderate opponents of both the Islamic State and the Syrian government? VOA State Department Correspondent Scott Stearns reports from the United Nations.
Video

Video Treasure Hunters Seek 'Hidden Treasure' in Central Kenya

Could a cave in a small village in central Kenya be the site of buried treasure? A rumor of riches, left behind by colonialists, has some residents dreaming of wealth, while others see it as a dangerous hoax. VOA's Gabe Joselow has the story.
Video

Video Iran's Rouhani Skeptical on Syria Strikes

Iranian President Hassan Rouhani expressed skepticism Friday that U.S.-led airstrikes in Iraq and Syria could crush Islamic State militants. From New York, VOA’s Margaret Besheer reports the president was also hopeful that questions about Iran’s nuclear program could be resolved soon.
Video

Video US House Speaker: Congress Should Debate Authorization Against IS

As wave after wave of U.S. airstrikes target Islamic State militants, the speaker of the Republican-controlled House of Representatives says he would be willing to call Congress back into session to debate a formal, broad authorization for the use of military force. VOA’s Michael Bowman reports from Washington, where legislators left town 10 days ago for a seven-week recess.
Video

Video Ebola Patients Find No Treatment at Sierra Leone Holding Center

At a holding facility in Makeni, central Sierra Leone, dozens of sick people sit on the floor in an empty university building. They wait in filthy conditions. It's a 16-hour drive by ambulance to Kailahun Ebola treatment center. Adam Bailes was there and reports on what he says are some of the worst situations he has seen since the beginning of this Ebola outbreak. And he says it appears case numbers may already be far worse than authorities acknowledge.
Video

Video Identifying Bodies Found in Texas Border Region

Thousands of immigrants have died after crossing the border from Mexico into remote areas of the southwestern United States in recent years. Local officials in south Texas alone have found hundreds of unidentified bodies and buried them in mass graves in local cemeteries. Now an anthropologist and her students at Baylor University have been exhuming bodies and looking for clues to identify them. VOA’s Greg Flakus has more from Waco, Texas.
Video

Video Ebola Robs Liberians of Chance to Say Good-Bye to Loved Ones

In Liberia, where Ebola has killed more than 1,500 people, authorities have worked hard to convince people to allow specialized burial teams to take away dead bodies. But these safety measures, while necessary, make it hard for people to say good bye to their loved ones. VOA's Anne Look reports on the tragedy from Liberia.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid