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The World Region

WDR 2020: Sneak preview

Pinelopi Goldberg's picture

The next World Development Report (WDR) on Global Value Chains: Trading for Development is well under way. Check out our website for a sneak preview.

Since the Bank’s last report more than thirty years ago on Industrialization and Foreign Trade, the world has been transformed, mostly in positive terms from a development perspective. Several low and middle income countries can now participate globally thanks to global value chains (GVCs).

Is inflation really gone for good?

Jongrim Ha's picture
Emerging market and developing economies have achieved a remarkable decline in inflation since the mid-1970s. In addition, inflation movement up or down has become increasing synchronized across the countries of the world. These developments have been supported by long-term trends such as countries’ widespread adoption of robust monetary policy frameworks and the strengthening of global trade and financial integration.

However, continuation of low and stable emerging market and developing economy inflation is by no means guaranteed. If the wave of structural and policy-related factors that have driven declines in inflation loses momentum, elevated inflation could re-emerge.

Furthermore, if the global inflation cycle turns up, emerging market and developing economy policymakers may find that keeping inflation low and stable may become as a great a challenge as getting there in the first place. To insulate economies from the impact of global shocks, options include strengthening institutions, including central bank independence, and establishing complementary fiscal policy frameworks.

Read more on the topic in the January 2019 Global Economic Prospects.
 
Emerging market and developing economies have achieved a significant decline in inflation since the mid-1970s, with median annual national consumer price inflation down from a peak of 17.3 percent in 1974 to about 3.5 percent in 2018. Declines in inflation over recent decades have been broad-based across regions and country groups.
 
Median Consumer Price Index (CPI), by country group

Debt in low-income countries: A rising vulnerability

Patrick Kirby's picture
Download the January 2019 Global Economic Prospects report.

Since 2013, median government debt in low-income countries has risen by 20 percentage points of GDP and increasingly comes from non-concessional and private sources. As a result, interest payments are absorbing an increasing proportion of government revenues in these countries.

This increase in public debt exposes low-income countries to greater currency, interest rate, and refinancing risks. At present 11 low-income economies are in debt distress or at a high risk of debt distress, up from six in 2015. Even those low-income countries that are at low or moderate risk of debt distress face eroding safety margins.

To shield themselves from the risks associated with high debt, low-income countries urgently need to strengthen the effectiveness of domestic resource mobilization, public investment and other spending, and debt management.
 
Debt relief under the Heavily Indebted Poor Countries initiative and the Multilateral Debt Relief Initiative (MDRI) helped to reduce public debt among low-income countries from a median debt-to-GDP ratio of close to 100 percent in the early 2000s to a median of just over 30 percent in 2013. This downward trend reversed sharply thereafter, with the median debt ratio rising to above 50 percent by 2017. The rise was especially sharp for commodity exporters.

Rising debt raises fewer concerns about debt sustainability if it is used to finance investment that raises countries’ potential output, and therefore their ability to repay loans in the future. In some low-income countries, wider fiscal deficits were matched by higher public investment. For most low-income countries, however, a substantial part of the borrowing has been used to finance a rise in current consumption.
 
Gross low-income countries (LIC) government debt

The challenges of informality

Shu Yu's picture

Download the January 2019 Global Economic Prospects report.

The informal sector — labor and business that is hidden from monetary, regulatory, and institutional authorities — accounts for about a third of GDP and 70 percent of employment (of which self-employment is more than a half) in emerging market and developing economies. While offering the advantage of employment flexibility in some economies, a large informal sector is associated with low productivity, reduced tax revenues, poor governance, excessive regulations, and poverty and income inequality.

Addressing the challenge of pervasive informality will require comprehensive policies that take into account country-specific conditions.  Initiatives to boost long-term development might include measures aimed at reducing regulatory and tax burdens, expanding access to finance, improving education and other public services, and strengthening public revenue frameworks.
 
One-half of the world’s informal output and 95 percent of its informal employment is in emerging market and developing economies. Both informal output and employment have declined since 1990, particularly in countries with higher output growth, rapid physical capital accumulation, and larger improvements in governance and business climates.

Share of informal output and employment

Energy prices fell 11 percent in December–Pink Sheet

John Baffes's picture
Energy commodity prices plunged more than 11 percent in December, led by oil (-13 percent), the World Bank’s Pink Sheet reported.

Non-energy prices fell marginally as losses in beverages, fertilizers, and metals were balanced by gains in food and precious metals.

Agricultural prices gained less than one percent—a 3.5 percent decline in the beverage price index was offset by a 3.5 percent gain of the food price index in response to grain price increases.

The Global Economic Outlook: Darkening Skies

Carlos Arteta's picture

Download the January 2019 Global Economic Prospects report.

Global growth sputtered in 2018 amid weakening trade and manufacturing, tighter financing conditions, and elevated policy uncertainties. 

Growth decelerated in almost 80 percent of advanced economies and in nearly half of emerging market and developing economies in 2018. This year, it is expected to slow further in a majority of advanced economies and in about a third of emerging market and developing economies. 

In all, global growth is predicted to moderate from 3.0 in 2018 to 2.9 percent in 2019 and an average of 2.8 percent in 2020-21, below previous forecasts. 

Risks of even slower-than-expected growth have become more acute. Financial market pressures and trade tensions could escalate, denting confidence and further setting back growth prospects in emerging market and developing countries. 

Here is a look at global economic prospects in five figures:

1. Global growth is moderating as trade and manufacturing lose momentum. The deceleration in global activity was more pronounced than previously expected in 2018, as reflected in softening export orders and industrial production growth. The slowdown in global trade came against the backdrop of ongoing trade tensions involving major economies. A. Global industrial production andnew export orders

A. Global industrial production and new export orders

Precious metals outlook: regaining lustre?

Wee Chian Koh's picture

This blog is the ninth in a series of ten blogs on commodity market developments, elaborating on themes discussed in the latest edition of the World Bank’s Commodity Markets Outlook. Earlier blogs are here.
 
The World Bank’s Precious Metals Price Index is forecast to decline marginally in 2019, following an expected 2 percent loss in 2018. Gold prices are projected to edge marginally lower and silver prices to tick slightly higher, while platinum prices are anticipated to rebound moderately. Key risks to this outlook are U.S. monetary policy, the strength of the U.S. dollar, and global demand.
 
Precious metals price index

Energy prices fell 15 percent in November–Pink Sheet

John Baffes's picture
Energy commodity prices plunged more than 15 percent in November, led by oil (-19 percent) and coal (-7 percent), the World Bank’s Pink Sheet reported.

Non-energy prices declined by 1 percent, due to losses in agriculture and metals.

Agricultural prices fell 1 percent—a 3 percent decline in oils and meals was offset by a marginal gain in beverages.

Fertilizer prices gained nearly 6 percent, led by a 13 percent increase in urea.

Rebound in metal prices? All eyes on China and trade

Wee Chian Koh's picture

This blog is the eighth in a series of ten blogs on commodity market developments, elaborating on themes discussed in the latest edition of the World Bank’s Commodity Markets Outlook. Earlier blogs are here.
 
The World Bank’s Metals and Minerals Price Index is forecast to remain broadly unchanged in 2019, following a projected 5 percent increase in 2018. However, volatility is anticipated to remain elevated due to China’s environmental policies, tariff negotiations between the United States and China, and Chinese policy responses aimed at stimulating the economy and cushioning the impact of trade tensions.

Fertilizer prices to rise in 2019 on supportive fundamentals

John Baffes's picture

This blog is the seventh in a series of ten blogs on commodity market developments, elaborating on themes discussed in the latest edition of the World Bank’s Commodity Markets Outlook. Earlier blogs are here.
 
The World Bank’s Fertilizer Price Index is expected to rise 2 percent in 2019, following a projected increase of 9 percent in 2018. The index rose 8 percent in the third quarter of 2018 (q/q) on high energy costs and tight supplies and was more than 18 percent higher than 2017Q3.

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