World Bank Rains on the Parade
Cited:CNN
The World Bank has seen fit to rain on what was a small parade, but a parade none-the-less. At a time when data from the U.S. economy is starting to look a little better and the European debt crisis is looking manageable, the World Bank is telling everyone, ‘don’t look know but…..’ The World Bank is one of the most respected financial non-government organizations in the world so their words do carry some weight. And in the case of the global economy, their words are a warning that the global economic crisis and the shocks to the system experienced in 2008 might pale in comparison to what lies ahead. Not exactly the type of speech that will get anyone to strike up the band.
The particulars of the World Bank message begin with revised growth estimates for the world’s largest economies. They are revising their growth forecast for the United States to 2.2% from earlier estimates at 2.9%, and just marginally higher for 2013 at 2.4% The usual suspects for the revised forecast is a slowdown for the U.S.’s largest trading partners and the quagmire that is still Washington politics.
For the developing world, the World Bank has scaled-down its growth forecast from 6.2% to 5.4%, while for developed countries overall their growth projections for 2012 are 1.4% from 2.7% previously announced. Among the principal problems weighing on global output according the the World Bank are a recession in Europe, the continued issues facing the most debt ridden Euro-zone nations – Greece, Italy, Portugal, Span, a slowdown in India and Brazil, as well as an uncertain political climate and failure to address outstanding fiscal issues in the United States.
My take:
The problems facing the global economy weren’t going away that easily so its not a surprise to see the World Bank come along to provide a dose of reality into the fray. Until Washington gets its act together and works together to address U.S. fiscal issues, and Europe figures out how to get the laggards back into the black, the world economy will plod along, with many bumps along the way.