Home' Trinidad and Tobago Guardian : January 14th 2016 Contents JANUARY 14 • 2016 www.guardian.co.tt BUSINESS GUARDIAN
WORLD ECONOMY | BG11
investors a glimpse of good news.
The situation doesn t get much better
elsewhere on the continent. Brazil s 2016
GDP forecast combined with last year s drop
puts the country in its deepest recession
since at least 1901. Two major credit rating
companies have already downgraded its sov-
ereign debt to "junk" status.
Next door in Argentina, newly-elected
President Mauricio Macri is steering the
country in a new direction to dodge eco-
nomic catastrophe and prevent a drop in
GDP this year.
Sworn into office last month, he has
already begun to implement measures aimed
at bolstering growth and reigning in the
country s fiscal deficit.
Greece did not get booted from the euro
and managed to recapitalise its struggling
banking sector, yet 2016 is still full of chal-
The economy will shrink by 1.8 per cent,
making the hundreds of billions of dollars
Greece still owes that much harder to pay
off. Serious debt relief will still prove to be
Add to that the strain on its borders of
migrants fleeing violence in Syria.
Russia will stay in negative territory after
contracting about 3.6 per cent in the first
nine months of last year, but will also turn
the corner on what will likely be its longest
recession in over two decades. Sanctions
from the US and European Union as well
as low oil prices, which account for 40 per
cent of the government s budget revenues,
took their toll.
Finland and Switzerland also made the
expected list of 10 worst performers for
2016. The former suffers from its geographic
proximity and economic reliance to Russia
while the latter is still reeling from a surprise
central bank decision to drop its currency
cap, which crippled exports and tourism.
Deflation-pained Japan is forecast to grow
1.0 per cent this year, lagging behind many
of its neighbours who made the projected
list of 2016 s best performers. The country s
Cabinet recently approved a record budget
for next fiscal year, betting that fiscal stim-
ulus and labour market reform will boost
Current forecasts are the median estimate
from each country s latest survey conducted
between October and December 2015, bring-
ing the total number of economies surveyed
Continued from Page 10
The World Bank has cut its forecast
for global growth this year given
weakness in the developing world.
The aid agency said Wednesday that
it expects the world economy to
expand 2.9 per cent in 2016, down
from the forecast of 3.3 per cent it made in June.
The global economy grew 2.4 per cent in 2015.
Several big developing economies---including Brazil
and China---are slowing or shrinking. Their troubles
have disproportionately hurt their smaller trading
partners, which have also been squeezed by depressed
The World Bank expects developing countries to
collectively grow 4.8 per cent, up from a six-year
low 4.3 per cent in 2015. China, the world s second-
biggest economy, is expected to register 6.7 per cent
growth, down from 6.9 per cent in 2015 and the
slowest pace since 1990.
The economic prospects of advanced economies
appear to be brightening as the developing world
struggles. The World Bank expects the US economy
to grow 2.7 per cent this year, up from 2.5 per cent
in 2015 and the fastest pace since 2006.
The agency foresees the 19-country eurozone
economy expanding 1.7 per cent, up from 1.5 in 2015
and fastest since 2011. And it expects the Japanese
economy, lifted by the Bank of Japan s easy-money
policies, to grow 1.3 per cent, up from 0.8 per cent
Since the 2008 financial crisis and the Great Reces-
sion, the World Bank, the International Monetary
Fund and others have frequently overestimated the
strength of the world economy and have later had
to downgrade their initial predictions.
The World Bank s 2016 forecast involves two key
optimistic assumptions for global growth: That com-
modity prices will stabilise after plummeting in 2015.
And that the Chinese government will keep growth
in the world s second-biggest economy from implod-
ing as it manages a difficult transition away from
fast but unsustainable growth based on excessive
investment in factories and real estate.
"China is going to continue slowing in an orderly
fashion," says World Bank economist Ayhan Kose,
who helped put together the forecast.
The agency also assumes that the Federal Reserve s
interest-rate hike last month---and any further rate
hikes---won t damage the US economy or cause much
turmoil in financial markets.
Its outlook differs from region to region and country
Latin America, forecast to grow just 0.1 per cent
this year, has been especially hard hit by falling com-
modity prices. Brazil s economy, once an emerging
powerhouse, is forecast to drop 2.5 per cent this year
after shrinking 3.7 per cent in 2015.
The Russian economy, squeezed by low oil prices
and international sanctions, is expected to slide 0.7
per cent this year on top of a 3.8 per cent drop last
The Iranian economy, which is getting relief from
economic sanctions after reaching a nuclear deal with
the Obama administration, is forecast to surge 5.8
per cent this year, up from 1.9 per cent in 2015.
The oil-importing countries of South Asia are
expected to benefit from lower energy prices. The
World Bank predicts that India will grow 7.8 per cent,
Pakistan 5.5 per cent and Bangladesh 6.7 per cent.
The countries of sub-Saharan Africa are expected
to grow 4.2 per cent, up from 3.4 per cent last year.
But the World Bank expects wide disparities among
African countries. South Africa, for instance, is forecast
to grow just 1.4 per cent, while Ethiopia is expected
to expand 10.2 per cent and Rwanda 7.6 per cent.
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