2017 was a rough year for retail, the economy, the geopolitical landscape and more. News headlines of the doomed state of trade agreements and weakening currencies loomed. But, while it was circling the drain, things started turning around. We closed out the year with with numbers that were enough to make people say, “Yes Virginia, there is a Santa Claus.” Now that 2017 is over and we’re on that, “New year, new me” kick, what will the “new” global economic situation be? It turns out The World Bank has some predictions for us.
On the Up
For 2018, the overall growth of the global economy is expected at the rate of about 3.1% The reasons behind the hike have to do with a recovery in investment and manufacturing, such as the World Bank investment in Bangladesh. In addition, developing countries receiving commodity prices has moved things along in the right direction. Due to this, developing economies are expected to grow around 4.5% in 2018. In comparison, advanced economies will only enjoy 2.2%. Jim Yong, the president of World Bank, says this is the time to invest in human and physical capital. He stated,
“This is a great opportunity to invest in human and physical capital. If policy makers around the world focus on these key investments, they can increase their countries’ productivity, boost workforce participation, and move closer to the goals of ending extreme poverty and boosting shared prosperity.”
What Goes Up, Must Come Down?
Governments need to utilize this growth period as a chance to make policy changes as this is seen as a temporary hike, according to Sourcing Journal. Future deterrents are weak or slowing investments and the aging working population. Talk of trade restrictions and protectionism also will have an effect as it will put a halt to further investments as the geopolitical landscape is uncertain. They further elaborated with,
“The deceleration is widespread, affecting economies that account for more than 65 percent of global gross domestic product. Without efforts to revitalize potential growth, the decline may extend into the next decade, and could slow average global growth by a quarter percentage point and average growth in emerging market and developing economies by half a percentage point over that period.”
Predicted growth rates by region for 2018:
East Asia and the Pacific- 6.2%
Europe and Central Asia- 2.9%
Latin America and the Caribbean- 2%
Middle East and North Africa- 3%
South Asia- 9% in 2018
Sub-Saharan Africa- 3.2%
South Africa- 1.1% growth
-as reported by Sourcing Journal Online
All of this is positive news in which we are starting the new year. Through new efforts with investment in people, places and economies hopefully the growth will hold strong into the next year and year after that. With more opportunity and participation in the labor force we could see a global economy stronger than ever.