These are the world’s fastest-growing economies in 2017
The World Economic Forum, June 14, 2017
Image:
REUTERS/China Daily
Alex Gray, Formative Content
Ethiopia is the fastest-growing
economy in 2017, according to the World Bank’s latest edition of Global Economic Prospects.
Ethiopia’s GDP is forecast to
grow by 8.3% in 2017. By contrast, global growth is projected to be 2.7%.
The East African country’s
accelerating growth comes on the back of government spending on infrastructure.
However, borrowing to finance
Ethiopia’s large public infrastructure projects has led to a rise in public
debt, which increased by more than 10% of GDP between 2014 and 2016, and now exceeds 50% of GDP.
Many emerging market economies
have high levels of public debt, and the World Bank says it is concerned about
this because it could drag down growth.
Worsening drought conditions
could also affect Ethiopia’s growth, says the report.
The outlook for the world
economy
Global growth is predicted to
rise by 2.7% on the back of a pick-up in manufacturing and trade, improved
market confidence and a recovery in commodity prices.
Trade increased by around 4% in
2017, up from a post-crisis low of 2.4% in 2016. Although it is expected to
remain below pre-financial crisis levels.
Image: The World Bank
Growth in emerging markets and
developing economies
As this map shows, much of Asia
and Africa (in light blue) are experiencing rapid growth.
Emerging-market and developing
economies are anticipated to grow 4.1% — far faster than advanced economies.
GDP growth across the world
Image: The World bank
The fastest-growing economies
Uzbekistan has the
second-fastest-growing economy, with projected growth of 7.6% thanks to rising oil prices,
benign global financing conditions, robust growth in the Euro Area, and
generally supportive policies among governments of several large countries in
the region.
Nepal is next, with a 7.5%
projection. Nepal’s growth has rebounded strongly following a good monsoon,
reconstruction efforts after the 2015 earthquakeand
normalization of trade with India, says the Bank.
India is the
fourth-fastest-growing economy with 7.2% projected growth, thanks in part to a rise in exports and an increase
in government spending.
Among the other top 10
performers are Djibouti and Laos with 7% and Cambodia, the Philippines and
Myanmar with 6.9%.
China, despite experiencing a
slowdown and an economic transition, was in 16th place with 6.5% expected growth,
helped by robust consumption and a
recovery of exports.
Advanced economies
But advanced economies are
improving too. Growth in advanced economies is expected to accelerate to 1.9%
in 2017, according to the World Bank.
Europe has experienced strong
growth, and growth in the United States is expected to recover in 2017 and to
continue at a moderate pace in 2018. Japan also saw robust growth at the start
of 2017.
Image: The World Bank
A fragile recovery
However, the World Bank warns
that the recovery in the global economy is fragile. New trade restrictions — such as those promised by President Donald
Trump — could
hamper global trade, just as uncertainty over policies could hamper investment.
Mounting public debt is also of concern to the Bank, because it says borrowing
conditions — such as interest rates — could get tougher, which would affect countries’ economies. Global
government debt has risen by 12% of GDP since 2007, to 47% of GDP by 2016.
At the end of 2016, government
debt exceeded its 2007 level by more than 10% of GDP in more than half of
emerging market and developing economies. Fiscal balances — the ability of a country to cope with increases
in costs of financing — worsened from their 2007 levels by more than 5% of GDP in one-third of
these countries, says the Bank.
Image: The World Bank
The Bank says that countries now
need to undertake institutional and market reforms in order to attract private
investment. This will help sustain growth in the long-term.
“The reassuring news is that
trade is recovering,” said World Bank Chief
Economist Paul Romer.
“The concern is that investment
remains weak. In response, we are shifting our priorities for lending toward
projects that can spur follow-on investment by the private sector.”
The pitfalls of using GDP
GDP has been has been widely used over
the years to measure economic progress. But many argue that it’s not a useful
indicator. Nobel Prize winning economist Joseph Stiglitz, IMF head Christine
Lagarde and MIT professor Erik Brynjolfsson have all said GDP is a poor indicator of progress,
and argued for a change to the way we measure economic and social development.
Alternatives could include
measuring jobs, well-being and health. GDP
also ignores the impact of important things like climate change.
Originally published at www.weforum.org.
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