Thursday, January 19, 2012

World Bank Issues The World A Rare Reality Check

The World Bank recently released it's "Global Economic Prospects" report for 2012. Organizations such as the World Bank tend to do their fair share of sugar-coating issues, however, their most recent report is about as blunt as you are likely to see from them in regards to the economic outlook.
"The world economy has entered a very difficult phase characterized by significant downside risks and fragility."
".....as a result forecasts have been significantly downgraded."
"However, even achieving these much weaker outturns is very uncertain."
"While contained for the moment, the risk of a much broader freezing up of capital markets and a global crisis similar in magnitude to the Lehman crisis remains. In particular, the willingness of markets to finance the deficits and maturing debt of high-income countries cannot be assured. Should more countries find themselves denied such financing, a much wider financial crisis that could engulf private banks and other financial institutions on both sides of the Atlantic cannot be ruled out. The world could be thrown into a recession as large or even larger than that of 2008/09."
Oh and for all those who are still deluding themselves into believing the idea that Europe will avoid a recession in 2012. According to the World Bank "Europe appears to have entered recession" which they estimate to have begun in the 4th Quarter of last year. Again this should not be a surprise to anybody, but for some reason people deny it until organizations such as these put their official stamp of approval on it (and there will probably still be deniers all the way up until each individual country makes it official.....big delay).

Here is a chart of the World Bank's estimates for GDP growth using 3 different scenarios they presented

According to the world bank regarding the baseline forecast...
"The baseline projections.....assume that efforts to-date and those that follow prevent the sovereign-debt stress of the past months from deteriorating further, but fail to completely eradicate market concerns."
I think their baseline assumptions are pretty optimistic. And regarding the contained crisis scenario...
"it is assumed that one or two small Euro Area economies (equal to about 4 percent of Area GDP) face a serious credit squeeze.
"It is assumed in this scenario that although borrowing costs in other European economies rise and banks tighten lending conditions due to losses in the directly affected economies, adequate steps are taken in response to the crisis to ensure that banking-sector stress in Europe is contained and does not spread to the rest of the high income world."
And finally regarding the larger crisis scenario....
"the freezing up of credit is assumed to spread to two larger Euro Area economies (equal to around 30 percent of Euro Area GDP)."
"Repercussions to the Euro Area, global financial systems and precautionary savings are much larger because the shock is 6 times larger"
In their conclusion:
The global economy is at a very difficult juncture. The financial system of the largest economic bloc in the world is threatened by a fiscal and financial crisis that has so far eluded policymakers’ efforts to contain it. Outside of Europe, high-income country growth, though strengthening, remains weak in historical perspective. At the same time some of the largest and most dynamic developing countries have entered a slowing phase.
These are not auspicious circumstances, and despite the significant measures that have been taken, the possibility of a further escalation of the crisis in Europe cannot be ruled out. Should this happen, the ensuing global downturn is likely to be deeper and longer-lasting than the recession of 2008/2009 because countries do not have the fiscal and monetary space to stimulate the global economy or support the financial system to the same degree as they did in 2008/09. While developing countries are in better shape than high-income countries, they too have fewer resources available (especially if international capital is not available to support deficit spending). No country and no region will escape the consequences of a serious downturn.
I'll leave you with random charts I found interesting from the report


Yes that is China growing from using 5% of the world's metal consumption to about 41% currently....now how much of that consumption is productive vs wasted building ghost cities, is another question.











28 comments:

  1. While the economy is showing signs of resilience, some experts are still unsure to when this will last. Whether or not this stability is for the long haul, as an Forex affiliate program, you should always be prepared.

    ReplyDelete
  2. My Web : we like to honor numerous other world wide web web pages around the web,
    Penangkal Petir Mueven though they arent linked to us, Penangkal Petir by linking to them.

    ReplyDelete
  3. I have had a difficult time clearing my mind in getting
    my thoughts out there. I truly do enjoy writing however it just
    seems like the first 10 to 15 minutes are generally
    lost just trying to figure out how to begin. Any ideas or tips?

    Many thanks!

    ReplyDelete
  4. Great looking website. Presume you did a bunch of your very ownyour very own coding

    ReplyDelete
  5. Its like you learn my thoughts! You appear to understand a
    lot approximately this, like you wrote the book
    in it or something. I think that you just can do with a few percent to drive the message house a bit, however
    instead of that, that is excellent blog. A great read.
    I will certainly be back.

    ReplyDelete
  6. This is the right blog for anyone who wants to find out about this topic. You realize so much its almost hard to argue with you (not that I actually would want…HaHa). You definitely put a new spin on a topic thats been written about for years. Great stuff, just great! obat ginjal bengkak

    ReplyDelete
  7. Its an incredible joy perusing your post.Its loaded with data I am searching for and I want to post a remark that "The substance of your post is marvelous" Great work. Gale Stone

    ReplyDelete
  8. I can only express a word of thanks! Nothing else. Because with the content on this blog you can add knowledge. Thank you very much for sharing this information. AvriqAvriq India

    ReplyDelete
  9. This is one the best website i have ever visited. Thanks for sharing this amazing article, will definitely subscribe myself for new stuff.Independence Day India Quotes

    ReplyDelete
  10. Coach Handbags Outlet are usually viewed as luxurious brands, but yet at inexpensive price.
    Today most people looking for COACH accessories will look for them at Coach Bags Factory Outlet.
    Coach Sale are just the most inexpensive items to purchase through Coach Purses Outlet, a small change purse or Cheap Coach Purses.
    Coach Bags On Sale are a fun accessory to add to a new collection.
    Coach Bags Outlet is can be carried or slipped over your shoulder.
    Authentic MK Outlet are made of high grade quality leather and Michael Kors Factory Outlet can actually have real leather on them.
    Michael Kors Purse Sale usually come with a plate bearing the MK Outlet logo to distinguish it from other Cheap Michael Kors Purses.
    Michael Kors Outlet Online have the inherent ability to capture the essence of what women like and what they want to wear and utilize.
    Michael Kors Outlet Store are a symbol of feminine elements and speak for all kinds of women.
    Michael Kors Purses On Sale of the day vary greatly, but all seem to share one characteristic, they are popular!

    ReplyDelete
  11. Great post i must say and thanks for the information. Looking for some inspiration for your next trip? Find great vacation ideas and inspiration from Things to do with your source for the web's best reviews and travel ...

    ReplyDelete
  12. Small Product Packaging Boxes are one of the most demanded packaging solutions. They are used to fulfil various purposes. Our soap boxes are one who fulfill your nends with our fast service.

    ReplyDelete
  13. I conceive you have noted some very interesting points, regards for the post.
    ทางเข้า1xbet

    ReplyDelete
  14. bespoke packaging boxes At Bespoke Packaging UK we strongly believe in the interests of bespoke packaging, which has multiple benefits.

    ReplyDelete
  15. The cosmetic boxes UK provide top-quality wholesale custom printed cosmetic packaging boxes UK in all sizes and colors. Based in London, Free Shipping...custom cosmetic packaging boxes | custom cosmetic packaging boxes

    ReplyDelete
  16. candle boxes UK

    Packaging printing is here to provide an accurate product. Candles have always been the momentousness of the dinner table. So why do not we put them in special kind of boxes to make the moments more sweets and memorable?candle packaging ukneed to get designed by various varieties. Your imaginations are the basic asset to implement this idea. We will create your imaginations into a box shape. So don’t miss this chance to get candle boxes of your design.

    ReplyDelete
  17. Good pictures and great post very informative thanks for sharing with us.
    affordable printed Candle Boxes
    Branding Cell Phone Boxes

    ReplyDelete
  18. Hi there mates, how is all, and what you would like to say concerning this
    article, in my view its truly awesome in favor of me.

    Look at my web-site; 풀싸롱

    ReplyDelete
  19. Thanks for sharing a piece of knowledgeable information with us, I got some valuable information in your article. It was awesome to read it. keep sharing great content with us.
    formal shirts for men online

    ReplyDelete
  20. Hi there, after reading this remarkable paragraph i am
    too happy to share my experience here with colleagues. 온라인카지노

    ReplyDelete
  21. A fantabulous post this has been. Never seen this kind of useful post. I am grateful to you and expect more number of posts like these. Thank you very much

    My web site - 온라인카지노

    ReplyDelete
  22. Hi there excellent blog! Does running a blog like this take a lot of work?
    I’ve very little knowledge of coding but I was hoping to start my own blog in the near future.
    Anyways, should you have any ideas or techniques for new blog owners please share.
    I know this is off subject nevertheless I simply wanted to ask.
    Thank you!
    오피월드

    oworldsmewep

    ReplyDelete
  23. Thanks a lot for sharing this amazing knowledge with us and your site is fantastic. I always find great knowledge from it. So, keep it up. Please Check out my article about fire insurance policy

    ReplyDelete