reflections on the global economic...
TRANSCRIPT
@wbg2030
worldbank.org/sdgsOctober 2018
Mahmoud Mohieldin
Senior Vice President
World Bank Group
Reflections on the
Global Economic
Outlook
A presentation to the ACI-ICA World
Congress
Demographic transitions
UrbanizationFragility and
violence
Climate changeMarket Volatility
and Debt Vulnerability
Technological changes
Shifts in the global economy
Renewed debate about
globalization
Global Megatrends
There was a demographic turning point in 2010
55
60
65
70
19
60
19
65
19
70
19
75
19
80
19
85
19
90
19
95
20
00
20
05
20
10
20
15
20
20
20
25
World
Advanced Economies
Emerging Market and Developing Economies
Percent of total population
that is working age
Source: World Bank Global Economic Prospects, 2018
• Higher working-age
population shares are
associated with higher
per capita output
growth.
• Global demographic
trends turned from
tailwinds to growth into
headwinds around 2010.
Lagging in human
development outcomes
Job creation for rapidly
growing share of
working-age people,
mostly youth
Populations beginning to
age; potential slowdown
in growth of labor supply
Adapting to aging to
maintain living
standards
The world can be divided into four major
demographic groups
Most of the global population lives in early- and late-dividend countries and while 78 percent of global growth was
from late- and post-dividend countries, 90 percent of global poverty is in pre- and early-dividend countries
* World Bank Global Monitoring Report 2015/2016
Urbanization and development outcomes
Proportion of urban population living in slums, 1990-2010Proportion of population living in urban areas, 1960-2011
Climate change and development progress
Process of integrating climate resilience into development
Index of risk preparation across countriesGlobal disaster losses, 1980–2012
The number of disasters and losses has been rising. Development progress needs to
integrate resilience to avoid undoing hard fought development gains
Commodity cycles exacerbate global
economic volatility
Commodity price indexes, annual
The rate of technological advancement is
unprecedented
Violent conflict is increasing and becoming
more complex
Number of people killed by violent conflict Number of conflicts, by type
Source: Pathways to Peace, World Bank, 2018
The world’s economic center of gravity, 1980–2016, in black, at three-year intervals
Multipolarity
1980
1989
19982007
2016
2049
Source: Danny Quah, 2011
Source: McKinsey Global Institute, 2012
Evolution of the earth’s economic center of gravity: 1 CE to 2025
Source: Danny Quah, 2011
The global risks
landscape in 2018
Source: World Economic Forum, The Global Risks Report 2018
13
Robust but Slowing Growth in Advanced Economies; Weakening Global Trade
0
1
2
3
201
7
201
8
201
9-2
0
201
7
201
8
201
9-2
0
201
7
201
8
201
9-2
0
201
7
201
8
201
9-2
0
Advanced
economies
United
States
Euro Area Japan
(Percent, 3 months SA) (Index, 50+ = expansion)
48
50
52
54
56
0
2
4
6
8
2016 2017 2018
Industrial production
growth
14
Tightening Financing Conditions; Diverging Commodity Prices
0
200
400
600
200
300
400
500
600
2015 2016 2017 2018
EMBI spreads
EM CDS spreads (RHS)
15
Change from
June 2018
2012-16 2017 2018e 2019f 2020f 2018 2019
World 2.8 3.0 3.0 2.9 2.8 -0.1 -0.1
Advanced economies 1.7 2.3 2.2 2.0 1.6 0.0 0.0
EMDEs 4.8 4.2 4.2 4.3 4.6 -0.3 -0.4
East Asia and Pacific 7.3 6.6 6.3 6.0 6.0 0.0 -0.1
Europe and Central Asia 3.2 4.0 3.1 2.5 2.7 -0.1 -0.6
Latin America and the Caribbean 2.2 0.8 0.7 1.8 2.4 -1.0 -0.5
Middle East and North Africa 3.5 1.2 1.8 1.9 2.7 -1.2 -1.4
South Asia 6.4 6.2 6.9 7.1 7.1 0.0 0.0
Sub-Saharan Africa 4.3 2.5 2.8 3.4 3.6 -0.3 -0.1
16
Financial stress Trade tensions
Policy uncertainty Geopolitical risks
Slower potential growth
17
Bloomberg; Haver Analytics; World Bank
• Left Panel. Inflation is measured by year-on-year change in the personal consumption expenditures (PCE) price index. Both PCE price index and unemployment rate are seasonally adjusted. Dotted lines refer to projections over longer run in the latest FOMC) meeting (in September 2018), based on the central tendency. Last observation is August 2018. Right Panel.
(Percent, year-on-year) (Percent of labor
force)
3
4
5
6
0
1
2
3
2015 2016 2017 2018
Inflation Unemployment rate (RHS)
-1
0
1
2
3
4
2010 2013 2016 2019 2022
United States Euro Area Japan
FOMC median
18
-1.2
-0.8
-0.4
0.0
United States China
EMDEs Global
80
90
100
110
Apr May Jun Jul Aug Sep
China
Other EM7
85
90
95
100
105
Apr May Jun Jul Aug Sep
China
Other EM7
19
Argentina
Brazil
Chile
China
Colombia
Hungary
India
Indonesia
Malaysia
Mexico
Morocco Peru
Philippines
Poland
Russia
Saudi
Arabia
South
Africa
ThailandTurkey
U.A.E.
0
10
20
30
-10 -5 0 5 10
Short-
term
external
debt
Current account (CA) balance
-16
-12
-8
-4
0
4
EMDEs with current
account deficits
EMDEs with current
account surpluses
20
Public Debt in EMs, 2013-18s (percent of GDP)
21
Gross Financing Needs in EMs External Financing Needs and Reserves
22
EMs: Value of International Bonds Maturing Change in Credit Rating in EMs, 2012-18
External Variable Rate Debt
Risks
Materialize
FX liquidity measures
Decline in growth
Decline in capital flows
Macro-prudential measures
Capitalflow
measures
FX reserve buffers
Monetary policy
Fiscal policy
Implement structuralreforms
Allow exchange ratedepreciation
Use targeted interventions Use conventional tools,
weighing policy trade-offs
Use fiscal stabilization if
space available; if not, build space
Build-up capital buffers
Use swap and FX liquidity measures
Ease capital flow regulationConsider temporary restrictions
on outflows
23
Financial stability
measures
Macroeconomic policy
measures
Investing in Inclusive
Growth: The Common Characteristics of High, Sustained Growth
24
Source: New Growth Models, World Economic Forum, 2014
Investing in Inclusive Growth: Dashboard for inclusive, sustainable, and multidimensional growth
25
Adapted from: WDR 2019 Changing Nature of Work, World Bank, 2018
Invest in resilience
(incl. social
protection)
Invest in infrastructureInvest in human
capital
Enablers
Achieving the SDGs
Data Finance STI
Harnessing the impact of disruptive changes
requires a comprehensive policy framework
Effects of
disruptive
changes
e.g. tech
How will we enable these investments?
Data
Finance
Implementation
Data is the new oil
Finance for development will need to
come from multiple sources
Big picture of developing countries' total resource receipts
Tax revenues
0
5
10
199
3
199
5
199
7
199
9
200
1
200
3
200
5
200
7
200
9
2011
2013
2015
2017
FDI Net Inflows (% of GDP)
Low & middle income
World
Middle East & North Africa
Fintech
Develop Robust Financial and Data Infrastructure to Sustain Fintech Benefits
Ensure Stability of Domestic Monetary and Financial Systems
31
Maximizing Fintech’s PotentialOpportunities, Challenges, Risks
Enable New Technologies to Enhance Financial Service Provision
Adapt Regulatory Framework and Supervisory Practices for Orderly Development and Stability of the Financial System
Modernize Legal Frameworks to Provide an Enabling Legal Landscape Enhance Collective Surveillance of
the International Monetary and Financial System
Monitor Developments Closely to Deepen Understanding of Evolving Financial Systems
Reinforce Competition and Commitment to Open, Free and Contestable Markets
Safeguard the Integrity of Financial Systems
Encourage International Cooperation and Information Sharing
Foster Fintech to Promote Financial Inclusion and Develop Financial Markets
Embrace the Promise of Fintech
Source: The Bali Fintech Agenda, World Bank, 2018
worldbankgroup.org/sdgs
Follow us on twitter @WBG2030
Mahmoud-Mohieldin on
@wbg2030
worldbank.org/sdgs
Mahmoud Mohieldin
Senior Vice President
World Bank Group