The Global Crises – An Update!

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).

economic-crisis1

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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3 comments on “The Global Crises – An Update!

  1. illero says:

    I don’t think the people at the World Bank have any more of a crystal ball than economists throughout the world, who have widely different points of view on what is working and what isn’t. However, I do think that every action has pluses and minuses.
    1) Reducing the bond-buy from $85B a month, even in a gradual way, will hurt someone in the short term. But continuing to borrow $85B a month will likely hurt a lot more people in the long run as the U.S. rolls up more and more debt than it can ever repay, while devaluing the dollar. Do we look short range, or long range? I’d go with the long view.
    2) Interest rates are unrealistically low, and some people are being hurt by this, and others are being helped by this. Letting rates rise slowly will undoubtedly hurt someone, but it will also help someone. I think it would be better for the world if we took the long view, and let rates rise a little.
    3) On the other hand, I think the ultra-slow recovery in the U.S. is not so much caused by the Fed’s policies as by this Administration’s stifling economic policies and regulation outside of the Fed’s actions.

  2. Nancy Ruegg says:

    I am NO economist, but it just seems common sense that borrowing vast sums of money, and spending it on programs that have never worked (the war on poverty, for example), with too little oversight to curtail graft and cheating, is a recipe for disaster. Why is this so difficult for some of our leaders in Washington to understand?

    Thank you for becoming a follower of my blog. I’m honored you find the posts meaningful.

  3. charlypriest says:

    I´m with Nancy Ruegg there, don´t know much about the economy I do know that borrowing and not being able to pay it back with interest doesn´t seem to me the economy is going to get any better. Not in my household not in my country.

    27% unemployment in Spain, and that is the official figure, imagine the unofficial. Part of the fault is the socialist government, not that the one we have now is doing much better. But they borrowed and borrowed and then borrowed some more money to pay for all of their cool and of course good natured welfare programs…I´m all for helping the poor, but I´ve become poor myself because of helping(through the taxes that I´ve payed… alot) the clueless. And universal health care? Just can´t work. Since on the long run you end up with more people taking out of the system and less people paying into the system. It´s that simple.

    Good to read ya again, long time didn´t read. Love that you make my two neurons work once in a while.

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