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Reports   Macro Indicators

1/10/2018

World Bank Publishes the Economic Expectations Report

The expected growth for the global economy is revised upwards to 3 percent for 2017, 3.1 percent for 2018, and 3.0 percent for 2019. The performance of developed countries were particularly effective in the upward revision of global growth expectations. The expectations of the United States, Eurozone and Japan were raised. The expected growth for developing and emerging economies were revised only for 2017

The expected growth of Turkey for 2017 was raised to 6.7 percent

World Bank Head Economist Ohnsorge: "We expect the cost of global funding to increase. This may affect the borrowing costs for countries such as Turkey which are heavily dependent on financial flows. The actual challenge is to sustain growth at a time of stricter funding conditions."

World Bank Published the January issue of Economic Expectations Report. It is stated in the report that there is a large-scale recovery in the global economy, which is expected to last for a few more years but also the downside risks continue. It is also pointed out that the growth continues to be weak and below the pre-crisis long-term average both globally and in the developing countries. 

It is emphasized that the forces that suppress the growth of the potential global output - the downside risks - could be defeated by structural policies. It is also reported that the decline in the oil prices in the petroleum-exporting countries in 2014-2016 encouraged certain structural reforms. Still it is highlighted that policy improvements were needed in developing countries in particular. Policy initiatives may both increase human resource, participation in the labor force, improve the institutions and reduce inequality. 

The global economy is expected to grow by 3 percent in 2017, 3.1 percent in 2018, and 3.0 percent in 2019

Revising the expectations of growth upwards within the framework of the accelerating recovery, the World Bank has announced that the global economy is expected to grow by 3 percent in 2017, 3.1 percent in 2018, and 3.0 percent in 2019. These figures were announced as 2.7 percent for 2017, and 2.9 percent for 2018-2019 in the previous report that was published in June 2017.

It is stated in the Report that especially the performance of the developed economies was effective in the upward revision of the expectations of global growth, and the 2017 and 2018 growth figures for these groups were revised to 2.3 percent for 2017 and 2.2 percent for 2018 with an 0.4-point increase. It was also reported that the developed countries were expected to grow by 1.9 and 1.7 percent in 2019 and 2020 respectively.

Raising the expectation for growth for the United States in the group of developed countries from 2.1 percent to 2.3 percent for 2017, the World Bank revised its expectations for 2018 and 2019 to 2.5 and 2.2 percent, respectively, with a 0.3-point increase. The World Bank also increased the expectation of growth for Eurozone from 1.7 percent to 2.4 percent for last year, and 1.5 percent to 2.1 percent for this year. The estimated growth for Eurozone for 2019 was also revised to 1.7 percent with a 0.2-point increase. The projections of growth for Japan in 2017, 2018, and 2019 were 1.7, 1.3, and 0.8 percent respectively. These figures were 1.5, 1.0, and 0.6 percent respectively in the previous report which was published in June 2017.

The World Bank revised the expected growth for developing and emerging economies for 2017 only. The expected growth of this group which includes China, Russia, India and Turkey among others is raised from 4.1 to 4.3 for 2017. The expectations for 2018 and 2019 were fixed at 4.5 and 4.7 percent respectively. 

The expected growth of China in this group is increased from 6.5 to 6.8 percent for 2017, and from 6.3 to 6.4 percent for 2018. It is also expected that China would grow by about 6.3 percent in 2019. The expected growth for Russia in 2017 and 2018 is raised to 1.7 percent each. Growth rates for these years were 1.3 and 1.4 respectively in the previous report. Russia is estimated to grow by 1.8 percent in 2019 and 2020.

The expected growth of Turkey for 2017 was raised to 6.7 percent

In the Report, the expected growth of Turkey in 2017 is raised to 6.7 percent. The World Bank disclosed this expectation as 3.5 percent in its previous report and then raised to 4 percent in October. The expected growth for 2018 and 2019 is kept fixed at the previous levels announced in October with 3.5 percent and 4 percent respectively.

The World Bank Head Economist Franziska Ohnsorge made the following statement about the growth data of Turkey: "The strong growth data of Turkey surprised us like everyone else. The year-round growth data has turned out to be higher than we expected. This is partly attributable to financial and monetary incentives. We expect the financial incentives to partially slow down and monetary policy to get more stringent in the upcoming period. Our estimations may also prove wrong. If the incentives are withdrawn more slowly, we may update the growth for 2018 upwards again."

The change in the global monetary policies may affect the global funding conditions, Ohnsorge said: "We expect the global funding costs to increase because the American Federal Reserve may increase the policy interest more in 2018 and 2019. This may affect the borrowing costs for countries such as Turkey which are heavily dependent on financial flows. The actual challenge is to sustain growth at a time of stricter funding conditions."

Pointing out that Turkish economy currently had a very strong growth rate, Ohnsorge said: "According to our base scenario, the growth of Turkey will continue to be close to the potential growth rates. We consider 5 percent as the highest level in the potential growth of Turkey. We rather tend to consider the potential growth as 4 percent."

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