Harboursandport.com: Lagos --- The outlook for the global
economy in 2019 has darkened, according to the World Bank's January 2019 Global
Economic Prospects report.
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| A ship discharging at a port |
International
trade and investment have softened. Trade tensions remain elevated, and several
large emerging markets underwent substantial financial pressures last year.
Growth in emerging markets and developing economies is expected to remain flat
in 2019 as a result.
Risks are
growing that growth could be even weaker than anticipated. The pickup in
economies that rely heavily on commodity exports is likely to be much slower
than hoped for, and growth in many other economies is anticipated to
decelerate.
Advanced-economy
central banks will continue to remove the policies that supported the
protracted recovery from the global financial crisis 10 years ago. Also,
simmering trade disputes could escalate. Higher debt levels have made some
economies, particularly poorer countries, more vulnerable to rising global
interest rates, shifts in investor sentiment or exchange rate fluctuations.
Addressing high
levels of debt looms as an increasingly important concern. In recent years,
many low-income countries have gained access to new sources of finance,
including private sources and creditors outside the Paris Club of major
creditor countries. This has allowed countries to fund important development
needs. However, it has also contributed to growing public debt.
Government debt
levels among low-income countries have risen from debt-to-GDP ratios of 30
percent to 50 percent over the last four years. Low income countries are using
an increasing proportion of government revenues to make interest payments. Such
debt service pressures will only grow further if borrowing costs rise as
expected in coming years.
In addition,
more frequent weather events raise the possibility of large swings in food
prices, which could deepen poverty. Seeking to shield vulnerable populations
from food price spikes may require a shift in policy emphasis away from trade
policies. Authorities have in the past intervened with trade measures to dampen
the impact of fluctuations in the prices of key food commodities, including
rice, wheat and maize.
But while
individual countries can succeed in the short term at buffering domestic
markets from price fluctuations, collective action around the world can
exacerbate food price volatility and push prices higher – hurting those with
the thinnest margins of security, says the World Bank. Policies introduced in
2010-2011 may have accounted for 40 percent of the increase of the world price
of wheat and one-quarter of the price rise for maize. It is estimated that the
food price jump of that period pushed 8.3 million people into poverty.
While food
prices have declined since peaks at the turn of the decade, world hunger and
food insecurity have risen between 2014 and 2017. The number of under-nourished
people rose five percent to 821 million during that period, and food security
challenges have recently been recognized as an urgent priority by the G20.
Further, food
price spikes of the kind experienced in 2010-11 could occur again as extreme
weather events raise the possibility of disruption to food production.
The World Bank
says that instead of interventions such as export bans or the reduction of
import duties, effective approaches to soften the blow of higher food prices
include better safety nets such as cash and food transfers, school feeding and
public works programs. It is important for countries to have a strategy in
place to respond to food crises and to provide adequate resources for these
programs.
“At the
beginning of 2018 the global economy was firing on all cylinders, but it lost
speed during the year and the ride could get even bumpier in the year ahead,”
said World Bank Chief Executive Officer Kristalina Georgieva. “As economic and
financial headwinds intensify for emerging and developing countries, the
world’s progress in reducing extreme poverty could be jeopardized. To keep the
momentum, countries need to invest in people, foster inclusive growth and build
resilient societies.”
First published by: The Maritime Executive
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