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Prospects Weekly: Poverty is much lower in urban areas than in rural areas, Capital-goods orders data point to increased capital spending, Officially recorded remittances to developing countries remained relatively stable

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Poverty is much lower in urban areas than in rural areas and urbanization has contributed to progress towards the Millennium Development Goals (MDGs), according to the Global Monitoring Report (GMR) 2013: Rural-Urban Dynamics and the Millennium Development Goals. Capital-goods orders data point to increased capital spending, particularly in developing countries, but growth has been softening in Q1 2013. Officially recorded remittances to developing countries remained relatively stable as a share of recipient developing countries’ GDP in 2012.
Developing countries need to harness urbanization to achieve the MDGs. Countries with higher levels of urbanization, such as China, and many others in East Asia (EAP) and Latin America (LAC), have played a major role in lowering extreme poverty. In contrast, the two least urbanized regions, South Asia (SAS) and Sub-Saharan Africa (SSA), have significantly higher rates of extreme poverty. With 76% of the developing world’s 1.2 billion poor living in rural areas, the GMR 2013 advocates complementary rural-urban development policies that facilitate a healthy move to cities without short-changing rural areas. On MDG attainment, progress lags on reducing maternal and child mortality and providing sanitation facilities, targets that will not be met by the 2015 deadline.
Capital-goods orders point to increased global capital spending in early 2013, but momentum may be weakening. After a sharp decline in mid-2012, G3 capital goods orders recovered briskly in the second half of 2012, with shipments following a similar path. Capital- goods orders rose at a more moderate pace in the first part of Q1 2013, with US capital goods orders rising at a 16.7% annualized pace, down from a 20% expansion in Q4 2012. In Japan, after a robust recovery in Q4 (12%) capital goods orders growth slowed to 3.3% in the three months leading to February, while in Germany capital goods orders rose 4.4% over the same period, almost half the pace recorded in Q4 2012 (8.3%). In developing countries, capital goods orders eased only slightly, rising at an 18.4% annualized pace in Q1, down marginally from the 20% pace recorded in Q4 2012, pointing to sustained growth in these economies.
Officially recorded remittances to developing countries rose an estimated 5.3%, to reach $401 billion in 2012, down from an 11.5% increase in 2011 and were up 0.2 percentage points as a share of recipient countries’ GDP. Average annual remittance growth is expected to accelerate to 8.8% for the period 2013-2015, with flows projected to exceed $515 billion by 2015, supporting growth and development and serving as a lifeline to the poor. India, China, the Philippines and Mexico remain the largest recipients of migrant remittances, though remittances represent a much larger share of GDP in some smaller developing countries such as Tajikistan, Liberia, Kyrgyz Republic, Lesotho, and Moldova. The average cost of sending remittances to the recipient countries was broadly unchanged at just above 9%, but the weighted average fell to an all-time low of 6.9% in Q1 2013, as costs fell in large volume remittance corridors. They remain high in smaller corridors, affecting countries heavily dependent on remittance.

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