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Global Economy

On risk and black swans in developing countries

Carlos Végh's picture

In 2014, the World Bank issued a highly relevant and timely report titled Risk and Opportunity:  Managing Risk for Development. This report analyzed the growing number of heterogenous risks and opportunities affecting developing countries.  A clear challenge in finding a consistent risk management strategy stems from the sharp differences in the risks faced by developing countries; for example, commodity price shocks, financial crises, and natural disasters have all different defining characteristics.  While we could tailor risk management strategies to each one of these types of risks, not having the benefit of a unifying framework can lead to mistakes and mismanagement of the scarce resources available to developing nations to deal with these potentially disastrous events.  Five years after the publication of the report, in a time of growing macroeconomic headwinds for emerging markets and higher exposure to natural disasters, understanding the risks faced by these economies and how to effectively manage them continues to be a key policy challenge.

Monitoring the SDGs with purchasing power parities

Edie Purdie's picture

The ICP blog series explores ideas and issues under the International Comparison Program umbrella – including innovations in price and data collection, discussions on purpose and methodology, as well the use of purchasing power parities in the growing world of development data. Authors from across the globe, whether ICP practitioners or researchers making use of ICP data, are encouraged to submit relevant blogs for consideration to [email protected].

It has been over three years since countries adopted the UN’s 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals. From the outset, a number of targets were identified to help pinpoint the desired outcomes within these broad areas – 169 in total. Monitoring progress towards each of these targets relies on data originating in countries, and which are often collected in partnership with regional and international organizations. The World Bank’s Atlas of Sustainable Development Goals used such data to visualize trends and comparisons across the globe, drawing on data from World Development Indicators and many other sources.

Purchasing Power Parity (PPP) data, from the International Comparison Program, play an important role in this monitoring: by eliminating the effect of price level differences between countries they allow us to measure living standards and other economic trends in real, comparable terms.  PPPs are utilized in a number of the official SDG indicators, but also in other associated indicators, which help us to explore the underlying issues and impacts of the goals and targets more deeply.  The four charts presented here exemplify the crucial insights PPPs help provide in SDG monitoring and analysis.

Goal 1 seeks to eradicate poverty in all its forms by 2030. Extreme poverty is measured using the international poverty line of $1.90 a day using 2011 PPPs. The use of PPPs ensures that the poverty line represents the same standard of living in every county. Higher poverty lines used by the World Bank better measure poverty in lower-middle and upper-middle income countries.  Using these poverty lines, we can visualize the shifts in population living at various standards of living.

South Asia: A bright spot in darkening economic skies?

Hartwig Schafer's picture
South Asia is set to remain relatively insulated from some of the rising uncertainties that are looming large on the global economic horizon. The region will retain its top spot as the world’s fastest-growing region. The Siddhirganj Power Project in Bangladesh. Credit: Ismail Ferdous/World Bank

If, like me, you’re a firm believer in New Year’s resolutions, early January ushers in the prospect of renewed energy and exciting opportunities. And as tradition has it, it’s also a time to enter the prediction game.
 
Sadly, when it comes to the global economy, this year’s outlook is taking a somber turn.
 
In the aptly titled Darkening Skies, the World Bank’s new edition of its twice-a-year Global Economic Prospects report shows that risks are looming large on the economic horizon.
 
To sum up:  In emerging market and developing economies, the lingering effects of recent financial market stress on several large economies, a further deceleration in commodity exporters are likely to stall growth at a weaker-than-expected 4.2 percent this year.
 
On a positive note, South Asia is set to remain relatively insulated from some of these rising global uncertainties and will retain its top spot as the world’s fastest-growing region.
 
Bucking the global decelerating trend, growth in South Asia is expected to accelerate to 7.1 percent in 2019 from 6.9 percent in the year just ended, bolstered in part by stronger investments and robust consumption.  

Among the region’s largest economies, India is forecast to grow at 7.5 percent in fiscal year 2019-20 while Bangladesh is expected to moderate to 7 percent in fiscal year 2018-19. Sri Lanka is seen speeding up slightly to 4 percent in 2019.
 
Notably, and despite increasing conflicts and growing fragility, Afghanistan is expected to increase its growth to  2.7 percent rate this year.

In this otherwise positive outlook, Pakistan’s growth is projected to slow to 3.7 percent in fiscal year 2018-19 as the country is tightening its financial conditions to help counter rising inflation and external vulnerabilities.

However, activity is projected to rebound and average 4.6 percent over the medium term.

Taxing the shadow economy

Rajul Awasthi's picture
Graphic: Nicholas Nam/World Bank

A sub-Saharan African tax commissioner went to buy a bicycle for his son. The seller asked if he would like to get a receipt and pay a 15 percent higher price, or take the bike with no receipt at a lower price. The tax commissioner paused and thought. What would you do?

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

Shining a light on asset-disclosure practices at the International Anti-Corruption Conference

Laura Pop's picture



In October, hundreds of representatives of civil society organizations, public and private sector representatives, journalists and international organizations gathered in Copenhagen for the 18th International Anti-Corruption Conference. This annual conference is viewed by many as a leading forum in the field of anti-corruption.

Accessibility and inclusion: Two key factors for disabled individuals

Sofía Guerrero Gámez's picture
 dos aspectos clave para las personas con discapacidad

Globally, over one billion people – 15% of the population – live with some form of disability,  according to the World Health Organization’s World Report on Disabilities. Beyond their physical, mental or sensory impairments, people with disabilities face barriers for inclusion in different aspects of life. They tend to have fewer socioeconomic opportunities, more limited access to education and higher poverty rates. Stigma and discrimination are sometimes the main barrier to their full, equal participation. How can this situation be addressed?

The rich can stop feeling guilty – and start paying taxes

Davida Connon's picture

Tax avoidance by the world’s wealthiest people and largest companies is widespread. The excuse is that such avoidance is legal. Rich individuals and corporations look for jurisdictions that have low or no tax on personal or corporate income, on dividends, on capital or R&D expenditure. They base their business activities there, at least for the purposes of taxation.

Blog your bureaucracy-related job market paper!

Daniel Rogger's picture
Photo: Simone D. McCourtie / World Bank

Editor's note: This blog post is part of a series for the 'Bureaucracy Lab', a World Bank initiative to better understand the world's public officials.
 
The World Bank's Bureaucracy Lab has been inspired by the folks at the Development Impact blog to highlight some of the best PhD work on the various academic job markets.

First day on the job

Pinelopi Goldberg's picture
Also available in: Français 

After months of early NY Penn Station mornings trying to remember whether to get on the Amtrak north to New Haven or south to DC, I am thrilled to transition from incoming Chief Economist to Chief Economist. We have so many fascinating problems to tackle and I truly hope my experience and humble efforts will contribute to the Bank’s mission.


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