A Hectic 2014 Is Slowing Worldwide Economic Growth Estimates

A slow first quarter prompted the World Bank to revise growth estimates down for developing economies.

National Journal
Kaveh Waddell
June 11, 2014, 1 a.m.

Polit­ic­al and en­vir­on­ment­al set­backs in the first half of this year have slowed eco­nom­ic growth in 2014, es­pe­cially for de­vel­op­ing coun­tries, ac­cord­ing to the World Bank’s Glob­al Eco­nom­ic Pro­spects re­port re­leased on Tues­day.

The World Bank down­graded its eco­nom­ic fore­cast for de­vel­op­ing coun­tries from its Janu­ary es­tim­ate of 5.2 per­cent to 4.8 per­cent, mark­ing the third straight year of sub-5-per­cent eco­nom­ic growth for these coun­tries. A slow first quarter delayed an ex­pec­ted eco­nom­ic up­turn, prompt­ing the re­vised fore­cast. The re­port cited a slew of glob­al factors for this year’s slow growth: “Bad weath­er in the U.S., the crisis in Ukraine, re­bal­an­cing in China, polit­ic­al strife in sev­er­al middle-in­come eco­nom­ies, slow pro­gress on struc­tur­al re­form, and ca­pa­city con­straints” were all in­stru­ment­al in the slow­down.

The World Bank’s long-term fore­cast of eco­nom­ic growth in de­vel­op­ing coun­tries, however, is re­l­at­ively un­af­fected by this year’s slow start: The rate should reach 5.5 per­cent by 2016.

Sup­ply-side con­straints will af­fect many de­vel­op­ing eco­nom­ies, from East Asia to Lat­in Amer­ica to Sub-Saha­ran Africa. Many of these coun­tries have already com­pletely re­covered from the fin­an­cial crisis and are near­ing the lim­its of their cur­rent eco­nom­ic po­ten­tial. The re­port sug­gests a fo­cus on struc­tur­al re­form to al­le­vi­ate these lim­it­a­tions. “Spend­ing more wisely rather than spend­ing more will be key. Bot­tle­necks in en­ergy and in­fra­struc­ture, labor mar­kets, and busi­ness cli­mate in many large middle-in­come coun­tries are hold­ing back GDP and pro­ductiv­ity growth,” said the re­port’s lead au­thor, An­drew Burns.

In high-in­come coun­tries, growth is gain­ing mo­mentum, ac­cord­ing to the re­port. These coun­tries are ex­pec­ted to add $6.9 tril­lion to glob­al de­mand over the next three years, up from the $3.9 tril­lion in­crease in de­mand they con­trib­uted over the last three years.

What We're Following See More »
WILL APPEAR TOGETHER TOMORROW
As Expected, Clinton Goes with Kaine
1 days ago
THE LATEST
SO MUCH FOR THE RATINGS BUMP
Convention Ratings Same as 2012
1 days ago
THE LATEST
8,000 DOCUMENTS
Wikileaks Releases Trove of DNC Docs
1 days ago
THE DETAILS

"Wikileaks published more than 8,000 documents purportedly taken from the Democratic National Committee Friday, just days before the start of the party's convention in Philadelphia. The documents included briefings on off-the-record fundraisers and candid photographs."

Source:
YES, WE KAINE?
Clinton Announcing VP Pick Today
2 days ago
THE LATEST

Hillary Clinton "is widely expected to announce her choice" of vice president "in an email to supporters while on a campaign swing in Florida on Friday afternoon." The consensus: it'll be Sen. Tim Kaine of Virginia, although Sen. Cory Booker of New Jersey and Agriculture Secretary Tom Vilsack are also said to be in the running.

Source:
EARLY BUMP FOR TRUMP?
New Round of Polls Show a Tight Race
2 days ago
THE LATEST
  • A Rasmussen Reports poll shows Donald Trump ahead of Hillary Clinton, 43%-42%, the fourth week in a row he's led the poll (one of the few poll in which he's led consistently of late).
  • A Reuters/Ipsos survey shows Clinton leading 40%-36%. In a four-way race, she maintains her four-point lead, 39%-35%, with Gary Johnson and Jill Stein pulling 7% and 3%, respectively.
  • And the LA Times/USC daily tracking poll shows a dead heat, with Trump ahead by about half a percentage point.
×