After about eight years since the outbreak of the global financial crisis in 2008, the global economy is still living a state of weak in the current year 2016 . the global economy can be described that it is passing to a state of unbalance, as we know, it is not the product of the moment. It is because of setbacks and crises that confound markets and reduce the chance of global growth.
This situation of the international economy today confused the expectations of the major financial and economic institutions such as the World Bank and the International Monetary Fund. the decline of the prices of the main commodities and slowing of the demand in developed economies, and the weakness of trade and decline in global financial flows have caused the decline of World Bank’s forecast dramatically for global economic growth estimates for the year in 2016 from 2.9 per cent to 2.4 per cent in the estimates announced in the last January.
The World Bank reduced its forecast for the growth of the global economy by 2.4 percent in the current year, that means global growth remain weak for the current year, unchanged from last year.
Here , the economist expert at the World Bank Ayhan Kosi confirms that “The global economy is fragile. the growth is weak. ”
In the years after the starting of the recovery of the global economy from the financial crisis in 2008 , the World Bank and the International Monetary Fund have gone too far in optimism about the global economy and were forced to reduce the previous forecasts.
But about US economic growth , the bank sees in its forecast that the figure would be 1.9 percent this year, down from 2.4 percent in 2015, a significant decline somewhat.
the report attributed the damage of the US factories to the strength of the dollar, which led to a rise in the cost of goods in factories abroad.
The World Bank expected in its report the growth of developing countries and emerging markets by 3.5 percent this year, lower than the previous expectation of growth of 4.1 percent.
The exporting countries have achieved , which have been adversely affected by the drop in oil prices and other commodities, a growth by 0.2 percent and its economy is expected to grow by 0.4 percent in 2016.
The report adds that the emerging economies that rely on imports to grow good by up to 5.9 percent, which benefited from the decline in the price of raw materials.
Investors also moved to acquire safe assets in the wake of the World Bank cut its forecast for global economic growth to 2.4% this year, down from its predict in January which was of 2.9%.
Investors sees that the direction of the US Federal Reserve is unlikely to raise interest rates at its next meeting on June 15 th, with the anticipation of the monetary policy meeting in Japan the next day.
And here we point out that keeping interest rates at a level close to zero does not necessarily lead to levels higher than the credit or investment .
In the report of the World Economic Outlook published by the International Monetary Fund seems to be this perception was present at the Fund’s experts about the growth of the world economy based on the current challenges of the global economy, where the current estimates indicates that the global growth to reach to the rate of 3.1% in 2015, and is expected to reach 3.2 % in 2016 and 3.5% in 2017, down on forecasts of 0.2% and 0.1%, respectively.
Here, the economists see the policies that followed the global financial crisis has led to the confusion of the global markets and led to a state of weakness in the global markets, such as the fiscal austerity policy and quantitative easing by major central banks, the global growth rate, and limited increase in job creation, and the continuation of high debt, in addition to increasing economic and non-economic risks that were not enough to stimulate growth, investment and consumption, but has created huge risks facing the global economy.
Rawabet Center for Research and Strategic Studies