The World Bank has come out with its 2017 economic forecast, and the numbers are distressing. The global economy is expected to rise by 2.7%, below earlier forecasts. Trouble Latin America will barely expand, by only 1.2%, as some of its largest nations struggle to grow at all.
The United States is expected to grow at 2.2%, well below forecasts that suppose that Donald Trump’s initiatives will slingshot gross domestic product higher. This puts it ahead of the average of developed nations, the economies of which are forecast to rise only 1.7% this year, according to the World Bank’s January 2017 Global Economic Prospects. The organization does admit some U.S. government investments could improve the country’s prospects.
The world’s developing economies are expected to grow quickly, up from last year:
Growth in emerging market and developing economies as a whole should pick up to 4.2 percent this year from 3.4 percent in the year just ended amid modestly rising commodity prices.
The recovery in Europe, which was tamped down by the Great Recession more than most regions, plagued by sovereign debt levels and high unemployment, should recover relatively quickly:
Growth in the region is projected to pick up to 2.4 percent in 2017, driven by a recovery in commodity-exporting economies and recovery in Turkey. The forecast depends on a recovery in commodity prices and an easing of political uncertainty.
Russia is a wild card. It should have a 1.5% improvement in its economy as oil recovers. If crude prices slip, that number will be in jeopardy.
East Asia and Pacific growth will be dragged down by China. The region’s economy should rise 6.2% while the Chinese economy, the world’s second largest, will expand by 6.5%, well below most years in the past decade.
Latin America’s economies will be troubled, particularly those in economically distressed Brazil:
The region is projected to return to positive growth in 2017 and expand by 1.2 percent. Brazil is projected to expand at a 0.5 percent pace on easing domestic constraints. Weakening investment in Mexico, on policy uncertainty in the United States, is anticipated to result in a modest deceleration of growth this year, to 1.8 percent.
Finally, in the least developed part of the world, Sub-Sahara Africa, growth will be modest:
Sub-Saharan African growth is expected to pick up modestly to 2.9 percent in 2017 as the region continues to adjust to lower commodity prices.
South Africa will grow only 1.1%.
The World Bank’s most important conclusion is that if investment by both government and the private sector strengthens, its entire forecast may be too high.