The global economy faced a problem: during the recovery from the financial crisis of 2008, most advanced economies have closed the gap between actual and potential growth of the economy. The situation can change power at the expense of reforms and increased investment. That the bankers and economists demand from politicians for years.
"If we forget about the current strong growth and look at historical perspective, it becomes obvious that economic growth is real, but the potential growth of the global economy in the future will be limited," explains in an interview with the Financial Times the head of the Department of economic development, the world Bank, Shantayanan Davaran.
It is expected that the growth of developed economies in the coming years will slow because there will be achieved full employment, and the Directors of Central banks to curb inflation, to raise rates. Now, says the report of the world Bank, it is expected that growth in developed economies will slow from 2.3% last year to 2.2% in 2018 and to 1.7% in 2020. Likely to reach his ceiling and emerging economies, whose growth in 2017 was 4.3%. This, of course, also negatively affect the development of the entire global economy.
The revaluation of values
Most major emerging economies, which were the main drivers of the development of the global economy over the last decade, significantly decreased the growth potential. Probably, the trend will continue into the next decade.
This reality, according to the Bank's economists, is the result of primarily long-term demographic changes. In such countries, such as China, the workforce, the aging of the population is reduced. This trend coincided with a slowdown in productivity growth.
Both problems, according to Devarana, can be solved with the help of investment and innovation. Not surprisingly, these two tasks now become critical to the global economy.
Concerns about the long-term prospects of the global economy coincides with fears in the short term. According to one of the authors of a new study Ayhan Kose, this year in the global economy "will continue to dominate slow risks." Among them, already mentioned, which became an unexpected increase in the cost of borrowing, which financed a significant part of the recovery in recent years. This is a surprise to most economists, the increase was possibly due to faster-than-expected rate hike from the Federal reserve and other Central banks. Another probable cause of the increasing concerns about upward of capital markets.
Protectionism and its consequences - a slowdown in world trade also remains a risk, especially given the fact that the increase in the volume of goods and services in the past year, 4.3% were very important as an engine for broader growth. Moreover, according to Kose, the slowing of potential global growth also made it more vulnerable to potential shocks in the future.
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