Rising food and fuel prices are taking the wind out of the global economy’s recovery this year, the World Bank said on Tuesday, cutting its forecast for global growth.
The bank projected said global growth will only be 3.2 percent this year, one-tenth of a point lower than its January estimate and sharply off the 3.8 percent pace of last year.
The Washington-based development lender expected in its biannual Global Economic Prospects report that the world economy would rebound next year.
“But further increases in already high oil and food prices could significantly curb economic growth and hurt the poor,” said Justin Lin (林毅夫), the bank’s chief economist.
High-income countries at the nexus of the 2008-2009 global financial crisis were still struggling to recover. Growth would slow from 2.7 percent last year to 2.2 percent this year, slower than the previous 2.4 percent estimate.
The rich countries “have the largest amount of restructuring to do,” said Andrew Burns, lead author of the report, at a news conference at the bank’s Washington headquarters.
Burns said the US was in “a growth pause,” but a double-dip recession was “not likely” — echoing US President Barack Obama’s statement earlier on Tuesday that he was “not concerned about a double-dip recession.”
The world’s biggest economy was expected to grow a feeble 2.6 percent this year and accelerate to 2.9 percent next year, the bank said.
Japan’s March 11 earthquake-tsunami disaster and unrest in the Arab world, while cutting sharply into domestic growth, would make only a modest dent in global growth, the 187-nation institution said.
The recovery in Europe continues to face “substantial headwinds” from uncertainty about debt crises in several eurozone members. The 17-nation eurozone is expected to expand at last year’s pace of 1.7 percent this year, with growth only edging up to 1.8 percent next year.
By contrast, developing countries relatively sailed through the global downturn, providing the impetus for the global recovery.
However, at the same time their robust growth was creating the demand for commodities that has spurred prices higher.
“Most developing countries have returned to their precrisis levels of production,” Lin said at the news conference. “Now they have to shift their macroeconomic policies from countercyclical, inflationary monetary and fiscal policies to a more neutral policy stance.”
As developing countries neared full capacity, collective GDP growth was projected to slow from 7.3 percent last year to about a 6.3 percent pace each year from this year to 2013.
Many were operating above capacity and were at risk of overheating, especially in Asia and Latin America, the bank warned.
Burns called on developing countries to focus on structural reform in order to use their resources efficiently and to change their “mindset” of pursuing “growth at all costs.”
For China, the second-biggest economy and the world’s main growth driver, expansion is projected to slow from last year’s pace of 10.3 percent to 9.3 percent this year and around 8.7 percent in each of next year and 2013, “as the effects of government’s policy tightening take stronger effect.”
Crude oil prices, after averaging about US$79 a barrel last year, were now projected to hit US$107.20 a barrel this year before easing back slightly.
“Oil prices are expected to remain elevated as long as physical supplies are disrupted and fears persist of larger disruptions from political unrest in oil-producing countries,” the bank said in the new report.
Burns said that higher oil prices would underpin rising food prices, particularly pressuring the poor who spend a high proportion of their income on food.
Food production is “actually four times more energy-intensive than manufacturing,” he said.
“The pass-through will continue in 2012” and the consequences for the poor “will be with us for some time,” Burns said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day