World Bank forecasts surge in global economic growth
For the first time since the financial crisis both emerging and developed countries are showing positive economic growth. The World Bank has forecast the fastest global economic pace in four years, increasing to 3.2% from 2.4% last year.
This renewed vigour is being powered predominantly by the advanced progress of China and the steady continuous development of the wealthy west.
Director of the World Bank’s development prospects group, Andrew Burns, said that “For the first time in five years the high-income countries are going to be a second engine to the train of global growth”.
Unsettled policies and fiscal consolidation have been inhibiting economic growth in high income countries but as this becomes less prevalent there will be a surge of growth predicted to reach 2.2% this year.
The USA is the largest economy in the world and is expected to perform the best as a result of this new drive. Expansion is predicted to be 2.8% this year, continuing its run of positive growth in ten consecutive quarters.
In Europe recovery is also looking strong, with a 1.1% increase this year following 2013’s 0.4% dip. The forecast growth for developing countries is 5.3% this year, and 5.5% in 2015, up from 4.8% in 2013. This increased pace of growth is slightly lower than the 2003-07 boom, but in the current climate is certainly a positive sign.
However, any sudden changes to the market, for example if the U.S Federal Reserve decide to go ahead with tapering it’s $85 billion a month bond-buying programme, would be incredibly detrimental to any progress that has been made. An abrupt decrease of 50-80% in capital inflows to developing countries could occur if global bond yields start to rise and interest rates rocket.
Maintaining stability is essential in this precarious position but every country will benefit if the global economy continues to improve in this way.