São Paulo – The World Bank (IBRD) is expecting the global economy to pick up slightly this year. The bank is forecasting a 2.7% growth against 2.3% in 2016, according to its annual Global Economic Prospects (GEP) made available this Tuesday (10). Last year’s growth rate was the lowest since the post-global financial crisis period.<\/p>\n
Despite the growth estimate, the World Bank’s forecast for 2017 is 0.1 percentage point lower than the one made by the bank in June 2016.<\/p>\n
According to the IBRD, global economy was impacted last year by an “anemic” global investment flow and by the continuous weakening of global trade. The report says, for instance, that the growth rate of the global flow of foreign direct investments dropped from an average of 10% in 2010 to 3.4% in 2015. <\/p>\n
The bank believes that the growth of the global Gross Domestic Product (GDP) in 2017 will be impacted especially by the performance of emerging and developing countries. The forecast calls for a growth rate of 4.2% this year and 4.7%, on average, in 2018 and 2019 for this group, against a rate of only 3.4% in 2016.<\/p>\n
For the IBRD, these countries will contribute with 1.6 percentage point for the growth of global GDP in 2017, or 60% of the total performance, which hasn’t occurred since 2013. “After years of disappointing global growth, we are encouraged to see stronger economic prospects on the horizon,” said Jim Yong Kim, World Bank president in a statement. <\/p>\n
One of the reasons for the recovery is the increase in the price of commodities, since many of these nations are exporters of basic goods.<\/p>\n
Brazil<\/strong><\/p>\n In the case of Latin America and the Caribbean, for instance, after two consecutive recession years, the bank is forecasting a 1.2% growth. Brazil, the region’s largest economy, should resume growth after two years of GDP decline. The estimates for the country call for a 0.5% growth rate in 2017. In forecasts from last June, the bank had pointed to a decline of 0.1%, that is, the current forecast has gone up 0.6 percentage point. <\/p>\n In addition to the price of commodities, the “launching of favorable company-friendly reforms and focused on the market” contributed to improve the forecasts on Brazil.<\/p>\n In general, the risks for the Latin American countries are possible change in policies in the United States and Euro Zone that involve restrictions to trade and migrations, which have become possible since the election of Republican Donald Trump as president and the referendum that decided for the exit of the United Kingdom from the European Union, the Brexit. Other risks are lower-than-expected price increase of commodities and a change in pace in the US monetary policy adjustments. <\/p>\n Arabs<\/strong><\/p>\n For the Middle East and North Africa, the IBRD forecasts a growth of 3.1% in 2017, against 2.7% in 2016. Oil prices are expected to go up but, according to the bank, the oil-importing countries, such as Morocco, Jordan and Tunisia, should be the ones registering higher economic growth. Saudi Arabia could registers a 1.6% GDP growth this year, against 1% in 2016, and Egypt’s economy should be able to keep a growth rate above 4%.<\/p>\n The main risks for the region are a possible lack of increase in oil prices and an escalation of regional conflicts. It’s important to point out that the conflicts in Syria, Yemen, Iraq and Libya impact not only them but also their neighbors.<\/p>\n On a global scale, the bank highlights the uncertainty revolving around the start of the Trump presidency in the US and the unfolding of Brexit. “Because of the outsized role the United States plays in the world economy, changes in policy direction may have global ripple effects. More expansionary US fiscal policies could lead to stronger growth in the United States and abroad over the near-term, but changes to trade or other policies could offset those gains,” said the World Bank’s director for development prospects, Ayhan Klose, in the bank’s statement. <\/p>\n *Translated by Sérgio Kakitani<\/strong><\/p>\n