Editor's Note: Below is a viewpoint from Chapter 6 of the Foresight Africa 2018 report, which explores six overarching themes that provide opportunities for Africa to overcome its obstacles and spur inclusive growth. Read the full chapter on the changing nature of Africa's external relationships here.
. The compact brings together interested African countries with the World Bank Group, the International Monetary Fund, the African Development Bank, and other multilateral and bilateral partners to develop and support policies and actions that are essential for attracting private investment. To date, 10 countries have signed up for the initiative and outlined their aspirations and reform programs under a framework adopted by the G-20 finance ministers in March 2017.
2018 will likely mark a turning point for the global economy. For the first time since 2008, the negative global output gap – defined as the difference between the levels of actual output and output if operating at full capacity – is expected to close. As the output gap closes in advanced economies, central banks are likely to normalize monetary policy after a decade of exceptional easing. With this anticipated withdrawal of stimulus by advanced economies, emerging market and developing economy policymakers need to remain alert to the potential for adverse spillovers.
Output gaps are closing
In 2018, for the first time since 2008, the negative global output gap is expected to be closed.
Source: World Bank staff estimates.
Notes: Output gaps calculated using multivariate filter. Global, regional, and group output gaps are calculated using constant 2010 U.S. dollar GDP as weights. The sample includes 15 advanced economies (Australia, Canada, Denmark, Finland, France, Germany, Italy, Japan, New Zealand, Norway, Spain, Sweden, Switzerland, United Kingdom, and United States) and 23 EMDEs (Argentina, Bolivia, Brazil, Bulgaria, Chile, China, Colombia, Croatia, Hungary, India, Indonesia, Kazakhstan, Malaysia, Mexico, Peru, Poland, Romania, Russia, Serbia, South Africa, Thailand, Turkey, and Vietnam). 2018 GDP is forecast. Dashed lines are 95 percent confidence interval bounds computed from the Kalman smoother state variances. Global lower and upper bounds are obtained as GDP-weighted averages of individual country lower and upper bounds.
The 2014-16 collapse in oil prices was driven by a growing supply glut, but failed to deliver the boost to global growth that many had expected. In the event, the benefits of substantially lower oil prices were muted by the low responsiveness of economic activity in key oil-importing emerging markets, the effects on U.S. activity of a sharp contraction in energy investment and an abrupt slowdown in key oil exporters.
Biggest drop in oil prices in modern history
Between mid-2014 and early 2016, the global economy faced one of the largest oil price declines in modern history. The 70 percent price drop during that period was one of the three biggest declines since World War II, and the longest lasting since the supply-driven collapse of 1986.
Real oil prices
Source: World Bank.
Notes: Real oil prices are calculated as the nominal price deflated by the international manufacturers unit value index, in which 100=2010. World Bank crude oil average. Last observation is November 2017.
Exponential progress in how we collect, process and use data is fundamentally changing our societies and economies. But the new digital economy depends fundamentally on a very physical enabler. Amazon and Alibaba would not exist without efficient ways to deliver products worldwide, be it by road or ship or drone. The job you applied for through Skype may require travel to London or Dubai, where you’ll expect to get around easily.
In fact, as the backbone of globalization, digitization is increasing the need to move people and goods around the planet. Mounting pressure on transportation as economies grow is leading to unsustainable environmental and safety trends. Transport needs are increasingly being met at the cost of future generations.
Can the digital revolution, which depends so much on efficient global and local mobility, also help us rethink transportation itself? To be a part of the solution to issues such as climate change, poverty, health, public safety, and the empowerment of women, the answer must be yes. Transport must go beyond being an enabler of the digital economy to itself harnessing the power of technology.
- Transforming Transportation
- sustainable transport
- sustainable mobility
- Sustainable Communities
- Urban Development
- Public Sector and Governance
- Private Sector Development
- Law and Regulation
- Labor and Social Protection
- Information and Communication Technologies
- Global Economy
- Climate Change
Our Top Ten blog posts by readership in 2017. This post was originally posted on April 24, 2017.
My Exfam colleague Kate Raworth’s book Doughnut Economics is launched today, and I think it’s going to be big. Not sure just how big, or whether I agree with George Monbiot’s superbly OTT plug comparing it to Keynes’s General Theory. It’s really hard to tell, as a non-economist, just how paradigm-changing it will be, but I loved it, and I want everyone to read it.
Down to business – what does it say? The subtitle, ‘Seven Ways to Think Like a 21st Century Economist’, sets out the intention: the book identifies 7 major flaws in traditional economic thinking, and a chapter on each on how to fix them. The starting point is drawings – working with Kate was fun, because whereas I think almost entirely in words, she has a highly visual imagination – she was always messing around with mind maps and doodles. And she’s onto something, because it’s the diagrams that act as visual frames, shaping the way we understand the world and absorb/reject new ideas and fresh evidence. Think of the way every economist you know starts drawing supply and demand curves at the slightest encouragement.Her main target is GDP (the standard measure of national economic output), and its assumptions – an open systems approach to economics that ignores planetary boundaries as it promotes economic growth. Her breakthrough moment while at Oxfam was coming up with ‘the doughnut’ – two concentric rings representing the planetary ceiling and minimum standards for all human beings. The ‘safe and just space’ between the two rings is where our species needs to be if it wants to make poverty history without destroying the planet.
When Kate came up with the doughnut in a highly influential 2012 paper for Oxfam, my non-visual mind failed to grasp its full value. After all, wasn’t this just a restatement of the idea of sustainable development? But it went viral, especially at the UN, because it allowed activists and policy makers to visualize both the threats and how they were trying to overcome them.
Download the January 2018 Global Economic Prospects report.
Despite an acceleration of global economic activity, potential output growth (the growth that can be sustained at full employment and capacity) has slowed. The slowdown reflected weak investment growth, slowing productivity growth, and demographic trends. These forces will continue, and, unless countered, will depress global potential growth further over the next ten years.
Sources: World Bank estimates; Haver Analytics; Penn World Tables; World Development Indicators, World Bank.
Notes: A. Based on production function approach, GDP-weighted averages for a sample of 30 advanced economies and 50 EMDEs.
Download the January 2018 Global Economic Prospects report.
Global trade regained significant momentum, supported by an upturn in investment.
As headwinds ease for commodity exporters, growth across emerging and developing economies is expected to pick up. However, risks to the outlook remain titled to the downside, such as the possibility of disorderly financial market adjustment or rising geopolitical tensions.
A major concern in the subdued pace of potential growth across emerging market and developing economies, which is expected to further decline in the next decade. Structural reforms will be essential to stem this decline, and counter the negative effects of any future crisis that could materialize.
The broad-based recovery should continue
Global growth accelerated markedly in 2017, supported by a broad-based recovery across advanced economies and emerging market and developing economies (EMDEs), and it is expected to edge up in 2018.
2018 is here, and we hope your new year is off to a positive start! Thank you for being a part of the global movement to help end poverty. For every like, share, “heart”, retweet, you name it, thanks for engaging with our content!
Every year brings new highlights, challenges, and priorities, and 2017 was no different.:
Twitter:for themselves or their loved ones. So unsurprisingly, you showed strong support for #HealthforAll during the Universal Health Coverage Forum in December.
What's one big reason families around the world fall into #poverty? #Health expenses. To reach the #globalgoals, we must achieve #HealthforAll. Join us at #UHCForum https://t.co/fl9GYMMBeH pic.twitter.com/LEAkSpeffQ— World Bank (@WorldBank) December 10, 2017
We were also very impressed to see how strongly you feel about preserving our planet. During last month’s One Planet Summit, several of you replied to the news of the World Bank’s announcement on phasing out financing of oil and gas exploration, with positivity. For example @RalienBekkers said: “Great, everyone should follow”:
Many of you agreed that women shouldn’t be restricted from doing some jobs, just because they are women:
Agriculture prices declined marginally, as a 5 percent decline in beverages, led by cocoa (down 10 percent) outweighed a 2 percent increase in raw materials prices, led by cotton (up 6 percent) and natural rubber (up 5 percent). Fertilizer prices declined 5 percent, led by a 11 percent drop in urea.
Metals and mineral prices gained less than 1 percent. A large gain in iron ore (up 12 percent) was offset by declines in zinc and nickel. Precious metals prices declined 2 percent, led by a 1 percent decline in gold.
The pink sheet is a monthly report that monitors commodity price movements.
Maintaining and restoring ocean ecosystems – or ‘ocean health’ – is synonymous with growing ‘ocean wealth,’ according to a soon-to-be published report by the World Bank and European Union. With rapid population growth, limited land and fewer terrestrial resources to house, feed and provide citizens with their energy needs, coastal nations across South Asia are looking seaward. In doing so, countries are clueing in on the fact that sustainably managing and developing ocean spaces is critical to a nation’s economic advancement.
Thinking Blue - thinking how best to sustainably tap ocean spaces as new sources of sustainable growth and transition to a blue economy - is new, although South Asian nations have used the sea for food and trade for centuries.
Five years ago, the term ‘blue economy’ had nothing to do with oceans; few had an inkling of its emerging importance.
In late 2017, at the Second International Blue Economy Dialogue hosted by the Government of Bangladesh in Dhaka, interest in what the blue economy is and why it matters is at an all-time high and rising. Perhaps this not surprising.