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January 2018

The Middle East and North Africa outlook in five charts: Recovery after a weak 2017

Lei Sandy Ye's picture
Also available in: Français | العربية
Growth in the Middle East and North Africa region is estimated to have slowed sharply in 2017 and is forecast to recover to 3 percent in 2018. Regional activity is anticipated to strengthen gradually over the medium term in response to policy reforms and easing fiscal adjustments. A number of downside risks continue to cloud the outlook for the region, including geopolitical tensions and conflict, weakness in oil prices, and obstacles to reform progress. These are only partly offset by the possibility of stronger-than-expected Euro Area activity.
 
Regional growth tumbled last year, led by oil exporters

Growth in the Middle East and North Africa is estimated to have slowed sharply to 1.8 percent in 2017 from 5 percent the year before, driven by decline in growth among oil exporters. Growth declined among Gulf Cooperation Council and non-GCC oil exporters, with oil production cuts and continued geopolitical tensions contributing to the fall-off.
Growth

The outlook for growth in South Asia in five charts: Robust prospects

Temel Taskin's picture
South Asia’s growth prospects appear robust, with household consumption expected to remain strong, exports expected to recover, and investment projected to revive with the support of policy reforms and infrastructure improvements.

Growth to pick up in region

Growth in the region was an estimated 6.5 percent in 2017. It is forecast to pick up to 6.9 percent in 2018 and stabilize around 7 percent over the medium term. The forecast assumes strengthening external demand as the recovery firms in advanced economies, and supportive global financing conditions. Monetary policy is expected to remain accommodative as modest fiscal consolidation proceeds in some countries.

Growth
Sources: Haver Analytics, World Bank.
Note: Shaded area indicates forecasts.

The outlook for Sub-Saharan Africa in five charts: Striving for recovery

Gerard Kambou's picture

The global economic recovery will see economic conditions improving in Sub-Saharan Africa. Activity is projected to pick up across the region over the forecast horizon, helped by firming commodity prices and gradually strengthening domestic demand. However, in the absence of reforms, potential growth is expected to remain low given demographic and investment trends, weighing on per capita incomes and diminishing the prospects for poverty reduction. Downside risks predominate, including the possibilities that commodity prices could remain weak, global financing conditions could tighten in a disorderly fashion, and that regional political uncertainty and security tensions could intensify. On the upside, a stronger-than-expected pickup in global activity could further boost exports, investment, and growth in the region.
 
Sub-Saharan Africa’s growth outlook is improving 

Growth in Sub-Saharan Africa is projected to pick up to 3.2 percent this year from an estimated 2.4 percent in 2017 and 1.3 percent in 2016, and strengthen gradually. While Angola, Nigeria, and South Africa – the region’s largest economies — will struggle to boost growth, the performance of the rest of the region will be stronger.   
 
Growth

Source: World Bank
Note: shaded areas represent forecasts

Why the global economy could be turning a significant corner, in six charts

Ayhan Kose's picture

2018 will likely mark a turning point for the global economy. For the first time since 2008, the negative global output gap – defined as the difference between the levels of actual output and output if operating at full capacity – is expected to close. As the output gap closes in advanced economies, central banks are likely to normalize monetary policy after a decade of exceptional easing. With this anticipated withdrawal of stimulus by advanced economies, emerging market and developing economy policymakers need to remain alert to the potential for adverse spillovers.

Output gaps are closing

In 2018, for the first time since 2008, the negative global output gap is expected to be closed.

Global output gap
Source: World Bank staff estimates.
Notes: Output gaps calculated using multivariate filter. Global, regional, and group output gaps are calculated using constant 2010 U.S. dollar GDP as weights. The sample includes 15 advanced economies (Australia, Canada, Denmark, Finland, France, Germany, Italy, Japan, New Zealand, Norway, Spain, Sweden, Switzerland, United Kingdom, and United States) and 23 EMDEs (Argentina, Bolivia, Brazil, Bulgaria, Chile, China, Colombia, Croatia, Hungary, India, Indonesia, Kazakhstan, Malaysia, Mexico, Peru, Poland, Romania, Russia, Serbia, South Africa, Thailand, Turkey, and Vietnam). 2018 GDP is forecast. Dashed lines are 95 percent confidence interval bounds computed from the Kalman smoother state variances. Global lower and upper bounds are obtained as GDP-weighted averages of individual country lower and upper bounds.

What triggered the oil price plunge of 2014-2016 and why it failed to deliver an economic impetus in eight charts

Marc Stocker's picture
Also available in: Español

Download the January 2018 Global Economic Prospects report.

The 2014-16 collapse in oil prices was driven by a growing supply glut, but failed to deliver the boost to global growth that many had expected. In the event, the benefits of substantially lower oil prices were muted by the low responsiveness of economic activity in key oil-importing emerging markets, the effects on U.S. activity of a sharp contraction in energy investment and an abrupt slowdown in key oil exporters. 

Biggest drop in oil prices in modern history

Between mid-2014 and early 2016, the global economy faced one of the largest oil price declines in modern history. The 70 percent price drop during that period was one of the three biggest declines since World War II, and the longest lasting since the supply-driven collapse of 1986.

Real oil prices
Source: World Bank.
Notes: Real oil prices are calculated as the nominal price deflated by the international manufacturers unit value index, in which 100=2010. World Bank crude oil average. Last observation is November 2017.

Gold in the dust: When artisanal mines shine

Victoire Girard's picture

Artisanal mining has a terrible reputation. A widespread perception is that this low-tech and labor-intensive way to extract natural resources “may cause severe environmental and health risks, conflict and generally few economic benefits.” Yet an estimated 40.5 million (+/- 25%) people around the world are directly working in these mines. What persuades them to do so?

Building solid foundations: How to promote potential growth, in six charts

Franziska Ohnsorge's picture

Download the January 2018 Global Economic Prospects report.

Despite an acceleration of global economic activity, potential output growth (the growth that can be sustained at full employment and capacity) has slowed. The slowdown reflected weak investment growth, slowing productivity growth, and demographic trends. These forces will continue, and, unless countered, will depress global potential growth further over the next ten years. 

Global Potential Growth Is Below its Long-term Average. Global potential growth slowed in 2013-17 below its longer-term average, whether globally, among advanced economies (AEs) or among emerging market and developing economies (EMDEs).
Sources: World Bank estimates; Haver Analytics; Penn World Tables; World Development Indicators, World Bank. 
Notes: A.  Based on production function approach, GDP-weighted averages for a sample of 30 advanced economies and 50 EMDEs. 

Why 2018 global growth will be strong, and why there is still cause for concern, in 10 charts

Carlos Arteta's picture
Also available in: Español |  Français | 中文 |  العربية 

Download the January 2018 Global Economic Prospects report.

Global growth accelerated to 3 percent in 2017, supported by a broad-based cyclical recovery encompassing more than half of the world’s economies, and is expected to edge up to 3.1 percent in 2018. Global trade regained significant momentum, supported by an upturn in investment.

As headwinds ease for commodity exporters, growth across emerging and developing economies is expected to pick up. However, risks to the outlook remain titled to the downside, such as the possibility of disorderly financial market adjustment or rising geopolitical tensions.

A major concern in the subdued pace of potential growth across emerging market and developing economies, which is expected to further decline in the next decade. Structural reforms will be essential to stem this decline, and counter the negative effects of any future crisis that could materialize.

The broad-based recovery should continue

Global growth accelerated markedly in 2017, supported by a broad-based recovery across advanced economies and emerging market and developing economies (EMDEs), and it is expected to edge up in 2018.
 
Growth

Energy and raw materials prices gained in December, beverages and fertilizer prices fell – Pink Sheet

John Baffes's picture
Energy commodity prices gained 2 percent in December—the sixth consecutive monthly gain—led by a 6 percent increase in coal prices, the World Bank’s Pink Sheet reported.

Agriculture prices declined marginally, as a 5 percent decline in beverages, led by cocoa (down 10 percent) outweighed a 2 percent increase in raw materials prices, led by cotton (up 6 percent) and natural rubber (up 5 percent). Fertilizer prices declined 5 percent, led by a 11 percent drop in urea.

Metals and mineral prices gained less than 1 percent. A large gain in iron ore (up 12 percent) was offset by declines in zinc and nickel. Precious metals prices declined 2 percent, led by a 1 percent decline in gold.

The pink sheet is a monthly report that monitors commodity price movements.
 
Energy and raw material price indexes increased in December while beverage and fertilizer prices declined sharply.