World Bank Cuts its Global Growth Outlook
In spite of its optimism for an improving global economy, the World Bank has lowered its expectations for global growth in the upcoming year. Due to the recession in Europe that has been deeper and longer lived than anticipated, and a slow-down in some of the emerging markets, expectations have been brought back down to earth as far as world-wide economic growth.
Why The Lower Growth Outlook?
For the emerging markets, much of the growth prior to the worldwide recessions was spurred on by other countries and their ability to consume resources. With recession at every turn, these emerging markets have had no choice but to bolster their own growth based on structural reforms. Places like Brazil, India, Russia and China, can expect a much lower forecast for growth next year. Rather than big jumps they may see growth go from 5.6% next year to 5.7% of GDP in 2015.
GDP Will Be Only 2.2% for Global Growth
Last year, the actual world’s entire gross domestic product was 2.3 percent. This year, they have slightly lessened their numbers and the anticipated GDP is only 2.2% this year. Previously, it had been expected that the world’s growth rate would increase slightly to 2.4% this year.
What Can the World Economy Expect Going Forward?
In recent years, the global economy has been characterized by volatility and lack of predictability. Looking forward, we may see growth rates slow, but hopefully things will be far less volatile and more predictable for investors. Currently, the World Bank is holding onto hopes that the global economy will grow as high as 3.3% by 2015. Slower growth may not be an entirely bad thing. According to Andrew Burns, the lead author in the World Bank report, he stated: “Growth is not slower because of inadequate demand but rather because, in our view, the very strong growth we saw in the pre-crisis period was due to that bubble phenomenon.” The elimination of “bubbles” is a very positive thing that should produce lasting growth and less volatility for the world’s economy.
As an investor, you may be wondering how the slowing of growth affects you and your investments? For more information on the markets and how they may be expected to respond to the current growth predictions, speak to a Redhawk Financial Advisor near you.