Global IssuesWorld Bank Sees Strong Growth for Some Developing Nations
A report released Thursday by the World Bank indicates that for the next two years, developing nations are better poised on the road to economic recovery than their more developed counterparts.
The Bank's outlook is less optimistic towards developed nations because the problems that initially caused the crisis remain entrenched in these countries.
Resource-rich, low-income nations show the most positive statistics for recovery, as they were the least integrated with the world economy. Furthermore, the report, entitled 'Global Economic Prospects: Navigating Strong Currents', states that these countries are still expanding their production rates, in spite of the crisis. Boosted by the high prices of these resources, their growth over the next two years appears promising.
For low-income exporters of resources, GDP growth is expected to stay at about 6.5 percent throughout 2011 and 2012, whereas in middle-income exporting countries GDP is expected to grow at 4.5 percent in 2011 and 4.6 percent in 2012.
These figures bode well for resource-rich developing nations as indicators of economic health return to or even exceed pre-crisis levels. For instance, by October 2010, industrial production in China, India, Nigeria, and Sri Lanka had surpassed August 2008 levels by 10 percent or more.
Citing intense restructuring and high consumer debt, among other factors, the report said that recovery in many high- income and developed countries was weaker. In the United States, for example, GDP is expected to expand 2.8 percent in 2011 and 2.9 percent in 2012.
'Each developing region experienced the crisis differently,' the report stated. 'Countries and regions that were the least caught-up in the excesses of the boom period [have] recovered their pre-crisis growth paths most rapidly.'
Still, economic growth comes in the context of pre-existing standards of living and problems.
Though GDP growth in Sub-Saharan Africa, for instance, is forecast at 5.3 percent for 2011 and 5.5 percent in 2012, the World Bank and IMF have estimated a 38-percent poverty rate in Sub-Saharan Africa, whereas without the economic crisis it would have been 36 percent. The two percent difference is equivalent to 20 million people.
The first of the U.N.'s eight Millennium Development Goals (MDGs) aims to eradicate extreme poverty and hunger by 2015 by halving the number of people who live on less than one dollar a day.
'Sub-Saharan Africa poses the greatest challenge, as it has high poverty rates and as of last year was off-track on its poverty reduction target at the regional level,' Merrell Tuck-Primdahl, a senior communications officer for the World Bank, told IPS.
Even with economic growth projected so positively, countries of Sub-Saharan Africa continue to struggle to meet the needs of peoples in the region. Plus, Tuck-Primdahl added, 'Concerns about the quality of growth and political stability remain.'
The success of the MDGs varies from region to region. Despite the challenges that Sub-Saharan Africa poses to fulfillment of MDGs, 'most African countries recorded strong growth in 2010 and continued steady growth is expected for the region overall, so the hope is for continued progress toward attainment of many of the MDGs,' Tuck-Primdahl said.
He also noted that while Africa has a bright future and will certainly continue to gain economic clout, its growth as a global economic force depends on many factors, including political stability. Nor can any time frame be estimated for such growth.
For the developed countries whose predicted progress over the next two years is less promising, the report cautioned against focusing too much on short-term fixes and gains. Although such measures have prevented the global economy from suffering worse damage that it already has, the report admitted, now the focus needs to shift to long-term restructuring and change.
It called for economic measures to take into account demonstrated and specific demographic needs of a country, such as an aging population.
But more importantly, 'To maximize their effectiveness, consolidation measures need to re-establish the long run sustainability of public finances and contribute to resolving pre-existing structural problems in economies,' the report said.
© Inter Press Service (2011) — All Rights ReservedOriginal source: Inter Press Service