Many developing countries seem likely to see a substantial downturn in economic growth over the 2015–2030 implementation period of the SDGs, compared with the recent years of strong growth. We explore the poverty implications of this revision in expectactions.
Supporting research available at:
http://www.ifpri.org/publication/implications-slowing-growth-emerging-market-economies-hunger-and-poverty-rural-areas
http://www.ifpri.org/publication/global-economic-slowdown-implications-rural-poor
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Implications of Slowing Growth in Emerging Markets for Rural Poverty and Hunger
1. Implications of Slowing Growth in
Emerging Market Economies for
Hunger and Poverty in Rural Areas of
Developing Countries
DAVID LABORDE
WILL MARTIN
TESS LALLEMANT
3. Issues at stake
Changes in macroeconomic projections: more pessimistic or more
realistic
Slower recovery in the OECD countries, slowdown and rebalancing
in China, lower commodity prices
Quantitative and qualitative changes in growth
Implications for SDG
Outcomes by 2030 on poverty
4. Implications for catching up?
Economic growth rates in low income, middle income
and high income countries (3 year moving average)
-4
-2
0
2
4
6
8
10
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
GDPGrowth(%)
Year
High Income Countries Low Income Countries
Middle Income Countries
5. Analytical framework
MIRAGRODEP global CGE used to develop alternative
growth trajectories compatible with :
IMF projections made in 2012
IMF projections made in 2015
◦Remark: not worst for all countries
Linking with 28 national household surveys based on Ivanic
and Martin (2013,…)
6. Comparison of 2012 and 2015 GDP growth
projections for 2017 (selection of countries)
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
BRA CAN CHN DEU FRA GBR IDN IND JPN NGA RUS USA
w2012 w2015
Source:WorldEconomicOutlook(2015and2012)-IMF
7. Comparison of 2012 and 2015 Current Account Balance
Projections (selection of countries with larger current
account imbalances)
WEO 2012 WEO 2015
Country 2013 2015 2017 2013 2015 2017 2018
Australia -84 -105 -118 -52 -50 -44 -46
Brazil -80 -97 -112 -91 -73 -67 -70
China 229 356 540 348 267 150 95
Germany 175 162 138 286 271 271 270
India -58 -64 -69 -30 -52 -78 -87
Japan 166 151 129 124 131 132 131
Korea 19 13 12 98 92 91 89
Kuwait 84 73 75 11 13 17 17
Norway 70 59 53 28 26 30 28
Qatar 58 36 20 10 -6 1 1
Russia 44 -19 -59 62 75 84 81
Saudi Arabia 152 113 107 -22 -13 4 -2
Turkey -72 -79 -100 -33 -39 -49 -50
Taiwan, China 44 53 64 64 63 61 62
US of America -499 -561 -696 -461 -629 -710 -747
South Africa -24 -27 -33 -14 -15 -16 -16
20
countries with
largest
imbalances
390 241 114 376 122
-24 -144
8. MIRAGRODEP framework
Global dynamic CGE
One representative household
Extended to include international remittances
Main drivers
Energy/mineral prices: supply adjustment
Total Factor productivity
Saving rates : nature of growth (Consumption vs investments) and level of growth (capital
accumulation)
Current account imbalances
Remittances
9. Scenarios and implementation
Scenario 0 Scenario 1 Scenario 2
GDP Trajectory – Leading economies
(HIC+Russia+Brazil+China)
Exogenous Exogenous Exogenous
GDP Trajectory – MIC + LIC Exogenous Endogenous (unconstrained) Exogenous
TFP – Leading economies Calibrated (WEO 2012) Calibrated (WEO 2015) Calibrated (WEO 2015)
TFP – MIC + LIC Calibrated (WEO 2012) Same value as in Scenario 0 Calibrated (WEO 2015)
Agricultural TFP Same dynamics as national TFP Same dynamics as national TFP Same dynamics as national TFP
Savings rate Unchanged Exogenous change in China 50%
to 40% by 2020, 40% to 35% by
2030
Adjusted for oil producing
countries to stabilize
consumption
As in Scenario 1
Current Account Balance Unchanged Surplus Reduction in China
Strong Surplus Reduction in oil
exporting countries
Increase deficit in the US
As in scenario 1
Remittances Endogenous, expressed as a
percentage of national (source
country) unskilled labor
payments
Endogenous, expressed as a
percentage of national (source
country) unskilled labor
payments
Endogenous, expressed as a
percentage of national (source
country) unskilled labor
payments
Natural Resources endowments Unchanged Calibrated for Gulf countries, US,
Russia, Australia, China to target
oil, gas and coal prices
As in scenario 1
10. Average annual growth rate for Total Factor
Productivity between 2011 and 2030
0.0
1.0
2.0
3.0
4.0
5.0
6.0
averageannualrate,%
S0
S1
S2
Source: MIRAGRODEP model projections
11. Real Unskilled Wage Rates from 2011 to
2030
Source: MIRAGRODEP model projections
0
50
100
150
200
250
300
350
400
GrowthRate2011-2030,%
S0
S1
S2
12. Real World Prices - Changes in 2030
compared to the Baseline
S1 S2
Agricultural World Prices
Oilseeds 4.81 6.32
Vegetable Oils 1.57 4.05
Processed Food 1.97 2.67
Rice 1.88 2.96
Wheat 3.75 4.00
Sugar 5.36 5.89
Red Meat 2.59 3.16
White Meat 3.16 3.45
Dairy 1.51 1.79
Non Agricultural World Prices (Selected)
Energy Commodities -26.96 -24.36
Mineral Products -9.30 -8.20
Metal Products -0.52 0.24
Capital Goods 1.65 1.79
Aggregate World Prices
Agriculture 2.39 3.19
Manufacturing goods 0.77 1.16
Services 0.82 1.00
Extraction -22.34 -20.04
World Prices - Changes
in 2030 compared to the
Baseline
13. Unskilled Wages - Rural
-40 -30 -20 -10 0 10 20 30 40
Brazil
Russia
High Income Asia
EFTA (inc. EU28)
Morocco
South Africa
East Asia (exc. leaders)
India
South America (ex. Brazil)
CIS
WAEMU
Rest of SACU
Unskilled Wages - Rural S2 Unskilled Wages - Rural S1
14. Household modelling framework
Based on processed and harmonized household surveys (LSMS, based
on Ivanic and Martin);
Detailed consumption patterns: price effects
Different income sources:
Wages (price effects, fixed per capita endowments)
Other factor incomes (price and quantity effects through accumulation)
Remittances (value changes)
Business sales (specific production pattern, prices effect, productivity
effects)
Scaling up of the results to all countries through clustering
15. Global Poverty Headcount under alternative scenario,
Percentage
$1.90, a day, 2011 PPP
Global poverty rate today: 14%
But global poverty with today’s
country rates and 2030 : 20%
16. Net and gross movements into and out of poverty,
Scenario 1, Percentage points, Total Population.
Source: Authors’calculations.
Note: Poverty is defined by the $1.90 PPP
2011 threshold.
18. Key findings
Updated 2030
Extreme
poverty rate
projection:
5.2%
38 million
people will not
leave extreme
poverty
compared to
previous
projections
Average
extreme poverty
rate in rural area
will still be
about 8%