The world economy has been in a state of crises since 2008, but the World Bank has said that it is now at a ‘turning point’ and much stronger growth is expected in 2014.
Richer countries will feel the effects of economic growth, more than poorer countries, to begin with. However, there are warnings that the economy is still vulnerable “to the impact of the withdrawal of economic stimulus measures in the US”. The USA has already started to decrease the amount of bonds bought per month by $85bn/£52bn. (A bond is a form of debt. The government has been buying bonds in a sort of IOU loan).
The concern is that global interest rates would increase, which has the negative consequence of making the world economy more fragile and prevent money from entering poorer countries. The world bank warns of “crisis risks” in poor countries if global interest rates do rise. “Growth appears to be strengthening in both high-income and developing countries”, says the president of the World Bank (Jim Yong Kim), but the issues lies in the lack of growth in the developing world.
It has been forecasted that global GDP is expected to increase by 3.2% this year, an increase from 2.4% in 2013. Despite the risk of lack of growth in the developing world global GDP growth in these countries is expected to increase by 5.3% this year, up from 4.8% in 2013.
What are your global economy forecasts? What is the economy like in your country?
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