In light of the GDP figures released on 25 May 2010, which indicated that growth accelerated further to 4.6% in 2010q1 (from 3.2% in 2009q4), this short note provides a brief analysis of the implications for GDP growth in calendar 2010 as well as for the South African Government’s Budget Review growth forecast.
“There was no secret, we had no choice but to take chance and sail into rough waters”- Lee Kuan Yew
Singapore is an inspiration to Sri Lanka and other developing countries in terms of economic development, political stability, and good governance. Since 1967, it has increased its per-capita purchasing power (PPP) 10-fold to $44,600 in 2007, surpassing countries such as Switzerland’s PPP ($37,300) in 2007. Singapore also has high demographic development compared to Sri Lanka even though both countries were about even in 1960s. The President, Lee Kuan Yew, navigated the Singaporean economy after gaining independence in 1965. With a population of over 5 million, Singapore maintains a market driven guided economy with diversity in cabinet and government.
What was their secret to success?
At independence in 1965, the economy was met with unemployment problems, an unskilled workforce, few entrepreneurs, no domestic savings, wretched housing conditions, militant labour unions and racial riots. They devised a strategic economic plan; developing entrepot (commercial) trading, export driven manufacturing, and then creating a service based knowledge economy.
At the launch, World Bank Africa Chief Economist Shanta Devarajan explained that, "although Africa was the hardest hit by the crisis, its recovery has been so remarkable that we could be at the beginning of what history will describe as Africa’s decade."
The outlook isn't all rosy, of course. With the global financial crisis halting the steady rate of growth in the region, Africa will now likely miss most of the Millennium Development Goals (MDGs) by their 2015 deadline, despite the remarkable progress. n estimated 7-10 million more Africans were driven into poverty and about 30,000-50,000 children died before their first birthday because of the crisis.
At a press briefing earlier today at the Spring Meeting, Philippe Le Houérou, World Bank Vice President for Europe and Central Asia, spoke of how the region has faced the greatest fiscal pressures among all the world's regions during the global economic crisis.
20 out of 30 countries in Europe and Central Asia have experienced a decline in GDP in 2009, and Le Houérou remarked that the region will face a slow recovery in the year ahead:
"2010 is going to be a tough year for the Region with growth projected at around 3 percent. The prospects for 2011-2013 are only slightly better. Rising joblessness is pushing households into poverty and making things even harder for those already poor."
|Malaysia's New Economic Model proposes a number of strategic reforms.|
The objective of the NEM is for Malaysia to join the ranks of the high-income economies, but not at all costs. The growth process needs to be both inclusive and sustainable. Inclusive growth enables the benefits to be broadly shared across all communities. Sustainable growth augments the wealth of current generations in a way that does not come at the expense of future generations.
We just released our China Quarterly Update. For us (the economics unit in the World Bank’s Beijing office), this is a good disciplinary device to go through the data, look at what has happened, think about what the economic prospects and policy implications are, look in some more detail into some issues, and write it all down.
In addition to the usual topics, this time we focused a bit on two macro risks that have caught the attention of analysts: a property bubble and strained local government finances. In this blog I summarize our current understanding of the general economic outlook and what it means for policymaking. In a separate blog post, I will soon discuss the issues on local government finances.
So far, the indications are that the global economic recovery remains on track and broadly in line with Global Economic Prospects (GEP) 2010 projections.
|Click image to enlarge.|
China’s economy grew 8.7 percent in 2009. This was more than the 8 percent target, despite the global recession that caused global output excluding China to fall about 3 percent. China’s growth outcome is substantially higher than projections made in early 2009. For instance, in our World Bank quarterly economic update (of which I am the lead author) we projected 6.5 percent GDP growth and some other forecasts were even lower (see Figure 1).
How did these forecasts come about, and what lessons we can draw from the experience of China’s growth in 2009? I cannot speak for my colleagues at the World Bank, let alone for other economists. But, all in all, while I have learned important lessons, I am not sure how differently I would see and do things if again presented with a situation like we were in a year ago.
As Malaysia redefines its growth strategy, the question of which sector to promote has been a subject of ongoing debate. Some have argued that the strategy should emphasize manufacturing – and preferably high-tech manufacturing – as innovation activity is most forthcoming in this sector. Others have countered that services are key, as the typical economic structure of an advanced economy is oriented towards services. Tradable services are also fast becoming an engine of growth.