12th December 2016
Perez Gongora & Asociados, S.C.
The World Bank reduces its 2016 global economic growth forecast down to 2.4% from 2.9% which was projected in January. This reduction is a result of slow growth of the advanced economies, persistently low prices of commodities, reduction in world trade and decreasing international capital flow. MSI's Mexican Accounting member Perez Gongora & Asociados, S.C. provides more information.
According to a recent update by The World Bank, emerging markets as well as developing economies that export commodities have had difficulties adjusting to a decrease in oil prices and other key commodities. This represents half of the reduction in forecast.
Projections show that these economies will just about grow by 0.4% this year, however the growth in commodity importers has been more resilient. For many countries, slow growth underlines the importance of applying economic policies that are focused on promoting economic growth and improving the living conditions of the population that live in extreme poverty.
World Bank Group’s president Jim Yong Kim comments “Economic growth continues to be the single most important engine for the reduction of poverty, and this is why we are deeply concerned with the decrease in growth of the developing nations that export commodities, caused by the decrease in the prices of these commodities.”
“The 2016 growth forecast for China is of 6.7% coming of a 6.9% for the previous year. It is expected that India’s strong economic expansion will be maintained stable at 7.6% while Brazil and Russia will go into a deeper recession that was originally predicted in January.”
In Europe, the report points out that given the continuing contraction of Russia, the forecast for growth stands at 1.2% for 2016, which is 0.4% lower that the January estimate.
For Latin America and the Caribbean, the two regions will register for a reduction of 1.3% in 2016 after a reduction of 0.7% in 2015. This will be the first time in 30 years that the two regions will experience a recession in two consecutive years.
The forecast for South America this year is a 2.8% reduction, followed by a small recovery in 2017.
Read more about The World Bank: A revised forecast for 2016 global economic growth
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