Why Global Growth Is Still Feeble, in Eight Charts
The World Bank's forecast is slightly higher, but it highlights reasons for caution
Yes, the world’s biggest growth engine, the U.S., is picking up steam and a rebound in commodity prices is helping to stabilize many of the world’s commodity-exporting emerging-market economies.
But the outlook for the global economy is still dim. Beyond the long-running crises still vexing policy makers, here are eight charts that help explain why.
Stagnating trade is a key symptom of the ailing global economy.
Global uncertainty has topped crisis levels as the world’s largest economies undergo major political shifts, largely with a more protectionist bent.
Many economists fear the U.S.-China tensions could devolve into a trade war. The future of the European Union is under threat as the U.K. negotiates an exit and anti-euro platforms gain momentum ahead of key continental elections. Chinese leadership is preparing a major leadership reshuffle. Elsewhere, Turkey’s attempted coup, conflicts in the Middle East and corruption scandals in several of the world’s largest emerging-market economies are injecting fresh worries into markets.
Growth in productivity—goods and services produced per hour of labor and a critical component for economic expansion—has languished in both advanced and developing economies.
All of those factors have put a damper on investment. Capital expenditures—spending on new projects—are falling.
Corporate acquisitions, meanwhile, are on the rise, a strategy firms often resort to when they see limited options for growing through investment in new capacity.
And while many emerging markets have learned from the past, debt is on the rise, particularly in corporations. Low-income commodity exporters especially have seen their debt balloon.
Debt problems in China, the world’s second-largest economy, are still a threat to the world. The World Bank and the International Monetary Fund have warned Beijing needs to step up its efforts to rein in credit, particularly calling for a retreat from government-fueled growth. But when private investment shrank last year, the government used its leverage to prevent a marked deceleration.
Trump’s Proposed Tax Cuts Could Boost U.S. and Global Growth, Says World Bank (Jan. 10)
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As Trump Threatens Tariffs, Here’s How Protectionism Could Thwack the Global Economy (Oct. 4, 2016)
Three Risks to the Global Financial System as Debt Hits Record Levels (Oct. 5, 2016)
Trump’s Vow to Target China’s Currency Could Be First Step to Trade War (Nov. 15, 2016)
China’s Debt Boom Looks Eerily Familiar (Jan. 2)