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

TEXT SIZE - +
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

Russia-Ukraine Crisis Could Trigger Cyber War

As tensions between Kyiv and Moscow escalate, so too has frequency of online attacks targeting government, news and financial sites More

Egyptian Court Jails 23 Pro-Morsi Supporters

Meanwhile, Egyptian officials say gunmen have killed two members of the country's security forces More

Pakistani Journalists Protest Shooting of Colleague

Hamid Mir, a host for private television channel Geo, was wounded after being shot three times Saturday, but is expected to survive 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.
Ukraine, Russia, United in Faith, Divided in Politicsi
X
Michael Eckels
April 19, 2014
There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Ukraine, Russia, United in Faith, Divided in Politics

There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid