World Bank economist Andrew Burns commented on America’s recent weak economic data, noting a significant slowing down of US economic growth. However he said that it was unlikely that the US would experience a “double-dip recession.” In terms of Europe, the recovery is somewhat stalling also vis-à-vis various crises in different areas, most notably Ireland and Greece.
World Bank Forecast
The World Bank is predicting that developing countries however, will encounter pretty solid growth which is good news. But what isn’t such great news is that with the likely increase in food and fuel prices, this will cause other economic backlashes. At the beginning of the year the World Bank was concerned about emerging economies receiving an excess in private capital. Today, this is less of a worry. At a news conference Burns said: “those strong, short-term capital inflows that dominated our concerns have eased substantially.” A tightening of fiscal and monetary policy had also reduced some of the pressures adding that “our baseline forecast is one where there is a smooth landing, a smooth resolution of those pressures but they are still there.”
Potential Political Problems
The Middle East and North Africa are likely to have a serious impacted on global growth if their political problems are not sorted out. This would result in a reduction of economic output by approximately 0.5 percentage points. Middle Eastern problems have really worsened since the beginning of 2011, at least vis-à-vis world economic growth. This was most notable in Egypt and Tunisia, followed by Bahrain, Jordan, Morocco, Saudi Arabia and Syria at the time that NATO maintained its Libyan bombing campaign. In addition, such unrest, according to the World Bank, could result in a world oil price increase of up to $200 a barrel. In addition, this will have a domino effect on global food prices, which is a mere three years after the last food price crisis.
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