The World bank said that the 2016 had been the worst year for the world economy since the deep crisis of 2008-and further added after it announced its findings of its annual Global Economic Prospects (GEP) that global growth had failed to meet its forecast for the last five years.
However it went to to comment that it expected a return to that level in 2017, adding that with incoming president who has promised tax cuts and public expenditure and investment the year may result in faster growth although it warned that it could be offset by his aggressive trade policies .
“The heightened level of policy uncertainty, especially regarding trade, has been exacerbated by recent political developments – most notably in the United States and the United Kingdom”, the GEP said. “This and other risks – particularly financial market disruptions amid tighter global financing conditions – may be amplified over time by mounting protectionist tendencies, slower potential growth and elevated vulnerabilities in some emerging markets and developing countries.”
The World Bank said it had rexamined its forecasts for the UK in both 2017 and 2018 and has said it is sharply down, despite the post stronger than expected growth that had been expected post Brexit
The Bank believes the uncertainty that will be a direct result of when the UK its laboral process of leaving the EU will have a huge impact on both business and consumer confidence . As we know here at European Business it seems literally no one including government has any idea of what is going on with the result being that both investment and major spending decisions will be put off short term .
The bank did further comment and say the events in the US would have a much bigger impact on the global economy.
The World Bank’s director for development Ayhan Kose added
“Because of the outsized role the United States plays in the world economy, changes in policy direction may have global ripple effects. More expansionary US fiscal policies could lead to stronger growth in the United States and abroad over the near-term, but changes to trade or other policies could offset those gains,”
Rising oil prices are expected to help lift three leading commodity exporters – Brazil, Russia and Nigeria – from recession in 2017. Growth in advanced countries is predicted to rise from 1.6% to 1.8% as a result of a stronger US performance.
“After years of disappointing global growth, we are encouraged to see stronger economic prospects on the horizon,” the bank’s president, Jim Yong Kim, said. “Now is the time to take advantage of this momentum and increase investments in infrastructure and people. This is vital to accelerating the sustainable and inclusive economic growth required to end extreme poverty.”