Global Economic Prospects Jan 2013
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  • GEP 2010 Presentation

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  • 1. Global Economic Prospects Assuring growth over the medium term January 2013THE WORLD BANK
  • 2. DEFAULT RISK IS DOWN IN EURO AREA SOVEREIGNSCredit default swap rates, basis points1800 Portugal1600 Ireland1400 Spain1200 Italy Euro Area (GDP weighted)1000 800 600 400 200 0 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13Source: World Bank, Datastream.
  • 3. DEFAULT RISK IS DOWN IN EURO AREA SOVEREIGNSCredit default swap rates, basis points1800 Portugal1600 Ireland1400 Spain1200 Italy Euro Area (GDP weighted)1000 800 600 400 200 0 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13Source: World Bank, Datastream.
  • 4. GROSS CAPITAL FLOWS TO DEVELOPINGCOUNTRIES HAVE REBOUNDED $ billions 70 New equity issuance Bond issuance60 Syndicated Bank-lending504030 20 10 0 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12Source: World Bank, Dealogic.
  • 5. BUT RAPID GROWTH REMAINS ELUSIVE ANDBUSINESS CONFIDENCE WEAKManufacturing purchasing managers index (PMI), points61595755 Other high-income Other53 developing 51 China4947 Euro Area4543 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 5Source: World Bank, Markit/Haver Analytics.
  • 6. WEAKNESS IN HIGH-INCOME COUNTRIES SAPPEDIP GROWTH IN DEVELOPING COUNTRIES IN 2012Industrial production, percent growth, 3m/3m saar 20 15 10 5 0 Other -5 Euro Area high income -10 Jan 11 Jul 11 Jan 12 Jul 12 Source: World Bank, Datasteam.
  • 7. WEAKNESS IN HIGH-INCOME COUNTRIES SAPPEDIP GROWTH IN DEVELOPING COUNTRIES IN 2012Industrial production, percent growth, 3m/3m saar 20 15 China 10 5 0 Other -5 Euro Area high income -10 Jan 11 Jul 11 Jan 12 Jul 12 Source: World Bank, Datasteam.
  • 8. WEAKNESS IN HIGH-INCOME COUNTRIES SAPPEDIP GROWTH IN DEVELOPING COUNTRIES IN 2012Industrial production, percent growth, 3m/3m saar 20 15 China 10 5 Other developing 0 Other -5 Euro Area high income -10 Jan 11 Jul 11 Jan 12 Jul 12 Source: World Bank, Datasteam.
  • 9. GROWTH PROJECTIONS HAVE BEEN DOWNGRADED FOR 2012 AND 2013, ALTHOUGH GROWTH WILL MAINTAIN A POSITIVE TRAJECTORY Annual GDP growth, % 8.0 7.0 6.0 Developing countries 5.0 4.0 World 3.0 2.0 1.0 0.0 2010 2011 2012 2013 2014 2015 9Source: World Bank, Global Economic Prospects 2013A.
  • 10. GROWTH PROJECTIONS HAVE BEEN DOWNGRADED FOR 2012 AND 2013, ALTHOUGH GROWTH WILL MAINTAIN A POSITIVE TRAJECTORY Annual GDP growth, % 8.0 7.0 6.0 Developing countries 5.0 4.0 World 3.0 2.0 1.0 0.0 2010 2011 2012 2013 2014 2015 10Source: World Bank, Global Economic Prospects 2013A.
  • 11. GROWTH PROJECTIONS HAVE BEEN DOWNGRADED FOR 2012 AND 2013, ALTHOUGH GROWTH WILL MAINTAIN A POSITIVE TRAJECTORY Annual GDP growth, % 8.0 7.0 6.0 Developing countries 5.0 4.0 World 3.0 2.0 1.0 0.0 2010 2011 2012 2013 2014 2015 11Source: World Bank, Global Economic Prospects 2013A.
  • 12. GROWTH PROJECTIONS HAVE BEEN DOWNGRADED FOR 2012 AND 2013, ALTHOUGH GROWTH WILL MAINTAIN A POSITIVE TRAJECTORY Annual GDP growth, % 8.0 7.0 6.0 Developing countries 5.0 4.0 World High-income countries 3.0 2.0 1.0 0.0 2010 2011 2012 2013 2014 2015 12Source: World Bank, Global Economic Prospects 2013A.
  • 13. GROWTH PROJECTIONS HAVE BEEN DOWNGRADED FOR 2012 AND 2013, ALTHOUGH GROWTH WILL MAINTAIN A POSITIVE TRAJECTORY Annual GDP growth, % 8.0 7.0 6.0 Developing countries 5.0 4.0 World High-income countries 3.0 2.0 1.0 0.0 2010 2011 2012 2013 2014 2015 13Source: World Bank, Global Economic Prospects 2013A.
  • 14. GROWTH PROJECTIONS HAVE BEEN DOWNGRADED FOR 2012 AND 2013, ALTHOUGH GROWTH WILL MAINTAIN A POSITIVE TRAJECTORY Annual GDP growth, % 8.0 7.0 6.0 Developing countries 5.0 4.0 World High-income countries 3.0 2.0 1.0 0.0 2010 2011 2012 2013 2014 2015 14Source: World Bank, Global Economic Prospects 2013A.
  • 15. PROSPECTS ARE VULNERABLE TO A RANGE OF EXTERNAL RISKSChange in 2013 real GDP from baseline, percent Abrupt decline in Chinese Prolonged fiscal paralysis Contained Euro crisis investment 0-0.2-0.4-0.6-0.8 -1 -1.2 East Asia & Pacific Europe & Central Asia -1.4 Latin America & Caribbean Middle-East & North Africa South Asia Sub-Saharan Africa 15Source: World Bank, Global Economic Prospects 2013A.
  • 16. PROSPECTS ARE VULNERABLE TO A RANGE OF EXTERNAL RISKSChange in 2013 real GDP from baseline, percent Abrupt decline in Chinese Prolonged fiscal paralysis Contained Euro crisis investment 0-0.2-0.4-0.6-0.8 -1 -1.2 East Asia & Pacific Europe & Central Asia -1.4 Latin America & Caribbean Middle-East & North Africa South Asia Sub-Saharan Africa 16Source: World Bank, Global Economic Prospects 2013A.
  • 17. PROSPECTS ARE VULNERABLE TO A RANGE OF EXTERNAL RISKSChange in 2013 real GDP from baseline, percent Abrupt decline in Chinese Prolonged fiscal paralysis Contained Euro crisis investment 0-0.2-0.4-0.6-0.8 -1 -1.2 East Asia & Pacific Europe & Central Asia -1.4 Latin America & Caribbean Middle-East & North Africa South Asia Sub-Saharan Africa 17Source: World Bank, Global Economic Prospects 2013A.
  • 18. PROSPECTS ARE VULNERABLE TO A RANGE OF EXTERNAL RISKSChange in 2013 real GDP from baseline, percent Abrupt decline in Chinese Prolonged fiscal paralysis Contained Euro crisis investment 0-0.2-0.4-0.6-0.8 -1 -1.2 East Asia & Pacific Europe & Central Asia -1.4 Latin America & Caribbean Middle-East & North Africa South Asia Sub-Saharan Africa 18Source: World Bank, Global Economic Prospects 2013A.
  • 19. ECONOMIES WITH FISCAL SPACE CAN REDUCETHE IMPACTS OF EXTERNAL SHOCKS % of GDP impact on developing economies of a 5% decline in high-income activity 0 -1 -2 -3 -4 -5 East Asia & Europe & Latin America Middle-East & South Asia Sub-Saharan Pacific Central Asia & Caribbean North Africa Africa Source: World Bank, Global Economic Prospects 2013A.
  • 20. ECONOMIES WITH FISCAL SPACE CAN REDUCETHE IMPACTS OF EXTERNAL SHOCKS % of GDP impact on developing economies of a 5% decline in high-income activity 0 -1 -2 -3 -4 with adequate fiscal space -5 East Asia & Europe & Latin America Middle-East & South Asia Sub-Saharan Pacific Central Asia & Caribbean North Africa Africa Source: World Bank, Global Economic Prospects 2013A.
  • 21. ECONOMIES WITH FISCAL SPACE CAN REDUCETHE IMPACTS OF EXTERNAL SHOCKS % of GDP impact on developing economies of a 5% decline in high-income activity 0 -1 -2 -3 -4 with adequate fiscal space without adequate fiscal space -5 East Asia & Europe & Latin America Middle-East & South Asia Sub-Saharan Pacific Central Asia & Caribbean North Africa Africa Source: World Bank, Global Economic Prospects 2013A.
  • 22. SMALL IMPROVEMENTS IN POTENTIAL GROWTHRESULT IN SUBSTANTIAL LONG RUN GAINS Developing country, per capita income, % of 2010 high-income level 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 1990 2000 2010 2020 2030 2040 2050 Source: World Bank, Global Economic Prospects 2013A.
  • 23. SMALL IMPROVEMENTS IN POTENTIAL GROWTHRESULT IN SUBSTANTIAL LONG RUN GAINS Developing country, per capita income, % of 2010 high-income level 0.8 0.7 0.6 Baseline projection 0.5 0.4 0.3 0.2 0.1 0 1990 2000 2010 2020 2030 2040 2050 Source: World Bank, Global Economic Prospects 2013A.
  • 24. SMALL IMPROVEMENTS IN POTENTIAL GROWTHRESULT IN SUBSTANTIAL LONG RUN GAINS Developing country, per capita income, % of 2010 high-income level 0.8 Rapid growth (+ 1.0 pp per annum) 0.7 High growth scenario results in developing-country incomes of 75% Faster growth (+ 0.5 pp pa) 0.6 high-income 2010 levels in 2050 versus 52% in baseline Baseline projection 0.5 0.4 0.3 0.2 0.1 0 1990 2000 2010 2020 2030 2040 2050 Source: World Bank, Global Economic Prospects 2013A.
  • 25. SMALL IMPROVEMENTS IN POTENTIAL GROWTHRESULT IN SUBSTANTIAL LONG RUN GAINS Developing country, per capita income, % of 2010 high-income level 0.8 Rapid growth (+ 1.0 pp per annum) 0.7 High growth scenario results in developing-country incomes of 75% Faster growth (+ 0.5 pp pa) 0.6 high-income 2010 levels in 2050 versus 52% in baseline Baseline projection 0.5 Weaker growth (-0.5 pp pa) 0.4 0.3 0.2 Slow growth (- 1.0 pp pa) 0.1 0 1990 2000 2010 2020 2030 2040 2050 Source: World Bank, Global Economic Prospects 2013A.