According to the report of World Bank, world economy will face shortfall. The Bank has warned the developed countries of risks and shortcoming by terming future would be as “darkening skies”
Economic Situation in Developed Countries:
According to the report, developed countries will be grown by 2.9 percent this year and 2.8 percent in 2020. The report further says that Europe, the United States of America and Japan will face shortcomings, yet America still have more rapid growth than the two of them.
However, bank economists are pleased with it. According to them, slowdown in growth will prolong the economic growth, which will be the reason for their being stabilized for long term.
Economic Situation in Developing Countries:
The report has different views about developing countries.
According to World Bank, developing countries will be grown at pace economically in upcoming years, except China.
According to bank economists China’s growth will be reduced to 6 percent by 2021 from its average 10 percent from 1980 to 2010. Although this reduction is engineered by the country to stabilize the country and its economy, according to the lead author of the report, Farnziska Ohnsorge.
Role of New Tariffs:
As the title says, there will be some risks which the whole world will face in upcoming years. Few of them are visible.
One of them is economic war between US and China.
USA and China are two biggest economies in the world. And their war over trade and installation of new tariffs and taxes last year has affected the trade of the world by 2.5 percent. The report says that implementation of new tariffs will double the reduction in global trade.
The insecurities of both the biggest economies of the world might have negative effect on developing countries, because China is the biggest and lead buyer of commodities, metals and energy from them. Moreover, US and China has share of 20 percent and 40 percent in world’s trade and world’s GDP. Thus, their short comings will result in economic shortfall in all developing countries.
Therefore, the World Bank expect that there would not be further recession in world’s economy because of tariffs and taxes, otherwise there would be recession in American’s economy itself too by 50 percent.
Role of Brexit:
Like every btec level 3 business assignments, World Bank views Brexit negative.
According to the report, Brexit would have negative impact on Europe and United Kingdom itself. Moreover, it would have impact on countries whose main buyers are European counties. Furthermore, the separation of UK from Europe without agreement may cause shortcomings in Eastern Europe and North Africa.
Other than this, Brexit may have negative impact on undeveloped countries too.
The exit may widen the gap between developed and undeveloped countries’ life style. Moroever, Sub-Saharan Africa is then expected to have less than 1 percent economic growth. And, it will cause much shortfall in Africa.
World economy will face some risks and shortcomings in upcoming years due to exit of United Kingdom from Europeor Brexit and economic war between US and China.