ASHGABAT, January 24, 2013 – The World Bank held a launch of the recently released Global Economic Prospects (GEP) report. The event organized by the Ministry of Finance of Turkmenistan was attended by representatives of Central Bank, Ministries and Government agencies of Turkmenistan, as well as academia, professional unions and associations working in the financial and economic sphere.
According to the report, four years after the onset of the global financial crisis, the world economy remains fragile and growth in high-income countries is weak. Developing countries need to focus on raising the growth potential of their economies, while strengthening buffers to deal with risks from the Euro Area and fiscal policy in the United States.
“The weakness in high-income countries is dampening developing-country growth, but strong domestic demand and growing South-South economic linkages have underpinned developing country resilience – to the point that, for the second year in a row, developing countries were responsible for more than half of global growth in 2012,” said Hans Timmer, Director, Development Prospects Group, the World Bank.
Last year developing countries recorded among their slowest economic growth rates of the past decade, partly because of the heightened Euro Area uncertainty in May and June of 2012. Since then, financial market conditions have improved dramatically. International capital flows to developing countries, which fell 30 percent in the second quarter of 2012, have recovered and bond spreads have declined to below their long-term average levels of around 282 basis points. Developing-country stock markets are up 12.6 percent since June, while equity markets in high-income countries are up by 10.7 percent. However, the real-side of the economy has responded modestly. Output in developing countries has accelerated, but is being held back by weak investment and industrial activity in advanced economies.
Downside risks to the global economy include: a stalling of progress on the Euro Area crisis, debt and fiscal issues in the United States, the possibility of a sharp slowing of investment in China, and a disruption in global oil supplies. However, the likelihood of these risks and their potential impacts has diminished, and the possibility of a stronger-than-anticipated recovery in high-income countries has increased.
Representatives of the Turkmen government agencies raised a number of questions related both to global and regional context, including questions on prospects of Euro currency, further growth potential in large economies as China and influence to other countries, opportunities and policy directions for countries rich in hydrocarbon resources and other related issues.
“Countries need to continue with their reforms in order to sustain and continue growth”, said Hans Timmer during the launch in Ashgabat. “The necessary reforms differ from country to country, but in many cases it is about eliminating obstacles. In the case of Turkmenistan it is important to unleash the growth potential outside the energy sector.”
The World Bank's twice-yearly Global Economic Prospects examines growth trends for the global economy and how they affect developing countries. The reports include three-year forecasts for the global economy and long-term global scenarios which look ten years into the future. Topical annexes in this online publication cover financial markets, trade, commodities, and inflation.
The full report and accompanying datasets are available at www.worldbank.org/globaloutlook.