|Adverse weather conditions are pushing some food commodity prices to levels not seen since the 2007/08 price spike. Nonetheless, weakening global demand has pushed down headline inflation in most regions.|
Macroeconomics and Economic Growth
Important developments today:
1. European shares and euro continue to slump as Moody’s cuts the rating outlook for Germany, the Netherland, and Luxembourg
2. Output in the Euro Area contracts for the sixth month in July
|The report says that a highly-educated, healthier and skilled workforce will enhance productivity.|
Economic news coming from the Philippines is surprisingly positive, and this has not gone unnoticed in international circles, judging by the number of inquiries we—the World Bank economic team in Manila that I am now leading—are getting. Our GDP growth forecast for 2012 (included in the new Philippines Quarterly Update report) is a solid 4.6 percent, while the first quarter saw an even more respectable growth rate of 6.4 percent. Other good news: foreign direct investment doubled in the first quarter, exports were up by 18 percent, and two ratings agencies upgraded their outlook on the Philippines.
However, the economy faces two challenges going forward: it will need to defend itself against a global slowdown, and it will also need to create a more inclusive growth pattern—one that creates more and better jobs, because performance on job creation has not been part of the positive news coming from the Philippines for quite a while now.
Important developments today:
1. Crude oil prices fall from 9-week high
2. German producer price inflation falls to lowest in two years
In 2001, trade representatives from around the world first arrived in Doha, the capital of tiny Qatar, for the latest round of World Trade Organization (WTO) negotiations. The goal was ambitious: work to reduce trade barriers, while ensuring that developing countries secure their fair share of global trade growth.
As European leaders convened in Brussels to find solutions—yet again!—to the debt crisis in the Euro zone, Kenyans are witnessing the old continent’s woes with a mix of surprise and self-satisfaction.
If only Greece had managed its debt like Kenya, Europe would be in a much better shape today. Greece’s debt would be standing at 45 percent of GDP, less than a third of what it actually is. Recent global economic history would need to be rewritten and Europe’s sick nation would be a macroeconomic success, with the luxury of deciding how to spend its resources well, rather than scrambling to mobilize them.
Drug trafficking is nothing new. But with the current levels of violence we are seeing, its effects on society and economic activity are staggering. From the suffering of victims, to increasing levels of corruption and the weakening of institutions, drug trafficking is not only a criminal problem—it is an urgent development issue which needs to be tackled.
The drug business is particularly insidious.
Yesterday, I discussed India’s incredible economic transformation over the last two decades and some of the challenges that the country is currently facing. So, what can India do to reduce the impact of global uncertainty and improve growth performance and boost investor confidence?
India’s firepower to respond to a crisis with traditional monetary and fiscal stimulus is much weaker now than prior to the 2008 crisis. Fiscal space for additional spending is severely constrained in light of continued high deficits. Room for monetary policy easing is modest in light of continued high inflation, and still low real interest rates. Moreover, when investor confidence is at a low ebb as it is in India, easing monetary policy would be tantamount to “pushing on a string.”
India has been a beacon to the world on how a thriving and vibrant democracy can transform itself into an economic powerhouse. The metamorphosis that took place in the Indian economy after the reforms of the early 1990s is nothing short of spectacular. The Indian economy was transformed into a dynamo of innovation and diversification. This fundamental transformation unlocked two decades of explosive growth in which poverty rates fell by nearly 20 percent, exports as a share of GDP increased nearly five-fold, and standards of living increased by a factor of almost four. This trajectory received but a glancing blow from the 2008 global financial crisis—this resilience was a testimonial to the benefits of the economic reforms of the previous 15 years.
Challenges to India’s Growth
But now, India’s economy once again faces formidable challenges and the fear is that it is considerably less well placed to deal with these challenges than at any time over the past two decades. The global economy is facing a new phase of the crisis characterized by an extreme bout of uncertainty, risk aversion and volatility, this time originating in the Euro Area. Some skeptics have recently questioned: Will India weather this storm as well as it did in 2008-09 and will the story of “Incredible India” remain credible?
We came to Rio+20 determined that one outcome of the UN Conference on Sustainable Development must be a plan for what ministers of finance, development and environment and ourselves need to do differently Monday morning, June 25th – if we are to achieve sustainable development for all.
We have our plan.
We came to Rio+20 knowing that inclusive green growth is the pathway to sustainable development, and the evidence here is that this international community agrees.
The analysis behind the World Bank’s report Inclusive Green Growth: The Pathway to Sustainable Development framed many of the conference debates and helped facilitate a new focus on natural capital accounting – a fundamental component of inclusive green growth.
According to the 59 countries, 86 companies, and 17 civil society organizations that supported the World Bank Group-facilitated 50:50 campaign – as well as many others – natural capital accounting is an idea whose time has come.
In fact, natural capital accounting events filled the Rio Convention Center, and government and civil society groups alike highlighted the importance of moving beyond GDP.
This new energy and emphasis around this issue may be the most important outcome of Rio+ 20.
- The World Region
- South Asia
- Middle East and North Africa
- Latin America & Caribbean
- Europe and Central Asia
- East Asia and Pacific
- Urban Development
- Labor and Social Protection
- Social Development
- Science and Technology Development
- Public Sector and Governance
- Private Sector Development
- Macroeconomics and Economic Growth
- Financial Sector
- Culture and Development
- Communities and Human Settlements
- Agriculture and Rural Development
- Sustainable Development
- Natural Capital Accounting