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Quantifying uncertainties in global growth forecasts

Franziska Ohnsorge's picture
Figure 1. Risks to Global Growth
Upside risks to global growth have increased since January while downside risks for current-year growth have reached post-crisis highs.

A 90% confidence interval implies a 90% chance of growth falling within the given range
Source: World Bank Global Economic Prospects report June 2016.
Note: “90 percent JAN16” is the 90 percent confidence interval of a fanchart based on data available for the January 2016 Global Economic Prospects report

Assessing economic forecast uncertainty and the balance of risks to the growth outlook is critical to effective policymaking. Lower-probability but high-impact events can lead to significant deviations from baseline projections, and this  should be factored into policy design. The World Bank’s most recent Global Economic Prospects unveiled a tool to quantify uncertainty around global growth forecasts and presented it in the form of a fan charts (Figure 1)

The approach adopted in the Global Economic Prospects report consists of two steps.

First, a number of measurable risk indicators that are typical sources of forecast errors for global growth forecasts are selected. Three were chosen: equity price futures, oil price futures and bond term spreads (the difference between short and long term interest rates). For instance, greater volatility in oil price futures could be associated with rising uncertainty around global growth forecasts, while a downward trend in equity price futures could signal rising downside risks to growth.

Second, the probability distributions of forecasts for these three indicators are then mapped to the distribution of global growth forecasts. Both the degree of uncertainty and the balance of risks to the forecast are approximated by weighted averages of the standard deviation and skewness implied by the distributions of expectations for the risk indicators. The weights are estimated in a vector autoregression model (Ohnsorge, Some, and Stocker 2016). To account for potential asymmetry in the distributions of risks, a two-piece normal distribution is assumed, in line with other studies.

Chart: How Does Extreme Poverty Vary By Region?

Tariq Khokhar's picture
Also available in: 中文

Most of the world's extreme poor live in Sub-Saharan Africa and South Asia. While over 1 in 10 people live in extreme poverty globally, in Sub-Saharan Africa, that figure is 4 in 10, representing 389 million people - that's more poor people than all other regions combined. Read more in the new report on Poverty and Shared Prosperity

Chart: Over Half the World Lives in Cities

Tariq Khokhar's picture
Also available in: 中文

Over half the world lives in cities, and those cities are responsible for over 80% of global GDP. However, the high density of people, jobs, and assets which make cities so successful, also makes them vulnerable to the wide range of natural and manmade shocks and stresses increasingly affecting them today. Read more about how the World Bank is investing in urban reslience. 

Chart: 385 Million Children Live in Extreme Poverty

Tariq Khokhar's picture
Also available in: العربية | 中文 | 日本語

Half the world's extremely poor are children. New analysis from the World Bank and UNICEF finds that almost 385 million children were living in extreme poverty in 2013. 8 out of 10 of those children lived in just 20 countries. Read more in "Ending Extreme Poverty: A Focus on Children

Q3 2016 Update of World Development Indicators Available

World Bank Data Team's picture
The World Development Indicators database has been updated. This is a regular quarterly update to over 600 indicators and includes both new indicators and updates to existing indicators. 

Data have been updated for international poverty and shared prosperity indicators, balance of payments series, monetary indicators, Enterprise Surveys, FDI and portfolio equity flows, remittances, and indicators for education, health expenditure, HIV, immunization, CO2 emissions, statistical capacity, telecommunications, threatened species, private participation in infrastructure, research and development, intentional homicides, and battle-related deaths. The OECD aggregates have been updated to reflect the addition of Latvia.

New indicators have been added for HIV, gender, and educational attainment. 

National accounts data updates include Argentina, which was temporarily unclassified in July 2016 pending release  of revised statistics, and is classified as upper middle income for FY17. 

Data can be accessed via various means including:

- The World Bank’s main multi-lingual and mobile-friendly data website, 
- The DataBank query tool: which also includes archived, previous versions of WDI
- Bulk download in XLS and CSV formats and directly from the API


Chart: Half of the World's Extremely Poor are Children

Tariq Khokhar's picture

Half the world's extremely poor are children. New analysis from the World Bank and UNICEF finds that almost 385 million children were living in extreme poverty in 2013. 9 out of 10 of those children lived in just 20 countries. Read more in "Ending Extreme Poverty: A Focus on Children

Chart: South Asia’s Exports Increasing in Value

Erin Scronce's picture

In South Asia, more than one million young workers enter the labor market each month. Education levels are on the rise, cities are sprawling, exports are gaining value and as a result, many eyes are on the region to become the next ‘global factory’. But to become the world’s next middle-income region, South Asia’s firms must become more globally competitive.

On October 6, join a live event where global thought leaders, business leaders and policy makers will discuss the obstacles and opportunities affecting the South Asia region’s competitiveness.

Chart: Fewer People Live in Extreme Poverty Than Ever Before

Tariq Khokhar's picture
Also available in: Français | 中文 | العربية

In 2013, an estimated 767 million people were living under the international poverty line of US$1.90 a day. Even as the world's population has grown, the number of poor has gradually fallen. But in spite of this progress, with over 1 in 10 people considered poor, poverty remains unacceptably high. Read more in the new report on Poverty and Shared Prosperity

Facebook, the OECD & the World Bank have a new way to survey businesses

Tim Herzog's picture

Countries in which firms were surveyed for initial round of “Future of Business Survey”

Facebook, the OECD and World Bank have just released the “Future of Business Survey” - a new source of information on small and medium enterprises. You can download the report and explore the results here.

The shared goal of this work is to help policymakers, researchers, and businesses to better understand business sentiment, and to leverage a digital platform to provide a unique source of information.

Chart: The World's Top Tourist Destinations

Tariq Khokhar's picture
Also available in: 中文

More than a billion tourists travel every year. Tourism is a powerful tool for reducing poverty, boosting economic growth, building social progress and ensuring peace. In the past 20 years, the world's top tourist destinations have remained popular, but the share of tourism-related income going to low and middle income countries has been rising. Read more about international tourism data in this earlier blog.