Economic slow down Current Affairs - 2020

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World Bank’s Global Economic Prospect: World Economic Growth projected at 2.5%

On January 9, 2020, the World Bank released its Global Economic Prospect. According to its forecast, the world is expected to grow economically at the rate of 2.5%. This is the lowest prediction since that predicted in 2008-09, 3.1%. By then, the global financial crisis derailed the economy.

Highlights

The report says that investment and trade in the country is expected to recover. However, the downward risks from 2019 are to continue. It also said that the advanced economies are to slip their growth by 1.4% as the manufacturing sector continues to soften.

The emerging markets in the developing economies are to witness acceleration in their growth according to the report. However, this is not applicable to all. A third of developing countries are expected to decelerate this year. Predominantly the growing economies are located in South and South East Asia.

South Asia

Growth in South Asia is expected to rise by 5.5% in 2020. The report predicts India’s growth rate at 5%. It is expected that the credit from non-banking companies to expected to weaken. The report also says that India will see a growth rate of 5.5% in the subsequent year.

The United States is expected to grow at 1.8% and European Union is projected to slip its growth by 1% in 2020.

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Global Competitiveness Index, 2019

India ranked 68th in the annual Global Competitiveness Index. It is the worst performing among the BRICS nations along with Brazil that is ranked at 71. The Global Competitive Index is compiled by World Economic Forum. The Forum has mapped 141 countries using 103 indicators.

India had dropped 10 places. A number of similar economies like South Africa, Turkey and Colombia have improved over the past year and have overtaken India.

This year Singapore has replaced US as the world’s most competitive country. The US was positioned at 2nd place and was followed by Hong Kong at third place and Netherlands and Switzerland at 4th and 5th places respectively. China was ranked at 28th position and was the highest ranked among BRICS nations. Vietnam showed higher improvements in the region and was ranked at 67

The report also said that Asia Pacific was the most competitive region globally. It was followed by Europe and North America.

Key findings of the report on India

  • India ranked high in terms of macroeconomic stability and market size.
  • India also ranked high in terms of corporate Governance. India was at 15th place in the category.
  • In terms of market India ranked third.
  • India had positive remarks in terms of renewable regulation.
  • In terms of innovation, India has punched above its development status. It was well ahead of most of the emerging economies that are on par with the advanced economies.
  • Poor health conditions and low Life Expectancy were the shortcomings in the country according to the report. In terms of life expectancy India ranked 109 out of 141 countries. This is one of the shortest as compared to South Asian average.
  • According to the report, India also needs to grow its skill base, market efficiency. Trade openness and worker protection rights according to the report are insufficiently developed.
  • The ratio of female workers to male workers in India was 0.26. It ranked 128th place and was very low as compared certain other developing countries.
  • India ranked 118 in incentivization and 107th place for skills

The US Economy

  • Though US performance as compared to 2018 slowed own, it scored in sub categories like employee skills, venture capital availability and business dynamism pillar
  • The decline of life expectancy in the US was huge. It was lower than China. Singapore ranked first in terms of life expectancy.

Concerns

  • The education system of the world’s largest and most innovative economies failed to keep up the pace of innovation. IT included India, China, Brazil, France and South Korea.
  • Economic stagnation was widespread. This has happened in spite of the central banks injecting more than 10 trillion dollars last year
  • Many of governments and central banks failed to use correct monetary policies to stimulate economic growth

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