A flagship report by the World Bank has highlighted concerns that a synchronised slowdown in the biggest emerging markets could be intensified by a predicted spell of financial turmoil.
There is potential that the so-called BRICS economies, which include Brazil, Russia, India, China and South Africa, could all face problems that would jeopardise the chances of economic growth in the coming year, the World Bank has said (1).
The Bank’s Chief Economist, Kaushik Basu, has also suggested that China’s recent economic stagnation is a potential danger, saying that the risks to the forecast have increased in the last six months, “particularly those associated with the possibility of a disorderly slowdown in a major emerging economy” (2).
Instead of being driven by the BRICS economies, economic growth is forecast to be driven by the more economically developed countries, thus posing a greater challenge on raising people out of poverty.
The report says that this challenge will pose an increasing threat to those in economies based on the exploitation of natural resources, many of which are sub-Saharan Africa, where poverty is already an extreme issue (2).
As a whole, the developing world suffered its worst year since the global financial crisis, growing by just 4.3% in 2015. “The contribution to global goals from these economies has declined substantially,” said the report. The World Bank’s assessment comes just days after the IMF, its sister organisation, warned that global performance in 2016 would fall short of expectations (3).
- The Guardian- “World Bank issues ‘perfect storm’ warning for 2016”
- The BBC- “World Bank warns about global economic outlook”
- The Telegraph- “Emerging economies can no longer power global growth, warms World Bank”