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

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. More

Video Sudan School Becomes Target of Aerial Attacks

Dropout rate at an all-time high in South Kordofan state because many schools have been destroyed during 3-year civil war More

Tennessee Songbirds Fly Coop Long Before Tornadoes Arrive

Researchers say birds apparently alerted to danger by sounds at frequencies below range of human hearing 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.
US: Response to Sony Hack Will Be Proportionali
X
Aru Pande
December 19, 2014 1:45 AM
The White House says President Barack Obama considers the cyberattack on Sony Corp. a serious national security matter and that the U.S. will counter with an "appropriate response." VOA correspondent Aru Pande reports.
Video

Video US: Response to Sony Hack Will Be Proportional

The White House says President Barack Obama considers the cyberattack on Sony Corp. a serious national security matter and that the U.S. will counter with an "appropriate response." VOA correspondent Aru Pande reports.
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Putin Says Russian Economy Will Emerge Stronger

Russian President Vladimir Putin has said his country's sinking economy will not only recover but also become stronger, despite falling oil prices and Western sanctions over Ukraine. VOA's Daniel Schearf reports.
Video

Video Detained Turkish Journalists Follow Teachings of US-Based Preacher

The Turkish government’s jailing of critical journalists has sparked international condemnation and is being seen as an effort to undermine the followers of an ailing Turkish preacher based in the United States. VOA religion reporter Jerome Socolovsky has more.
Video

Video ‘Anti-Islamization’ Marches Increase Tensions In Germany

Anti-immigrant rallies in Germany have been building in recent weeks, peaking Monday night in the city of Dresden where tens of thousands of people turned out to demonstrate against what they call the ‘Islamization’ of the West. Germany has offered asylum to more Syrian refugees than any other country, and this appears to have set off the protests. Henry Ridgwell reports from London.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.
Video

Video Refugees Living in Kenya Long for Peace in the Home Countries

Kenya is host to numerous refugees seeking safe haven from conflict. Immigrants from Somalia face challenges in their new lives in Kenya. Ahead of International Migrants Day (December 18) Lenny Ruvaga has more for VOA News from the Kenyan capital.

All About America

AppleAndroid