WASHINGTON, January 10. /TASS/. World Bank analysts expect this year to mark a turning point for the global economy, the organization said in its January report named ‘Broad-Based Upturn, but for How Long?’ released on Tuesday.
"The year 2018 will likely mark a turning point for the global economy because, for the first time since 2008, the negative global output gap is expected to be closed," the report said. "Among EMDEs, helped by the recent recovery in commodity markets, and advanced economies, output gaps should approach zero. The closing gaps in major advanced economies would allow a normalization of monetary policy after a decade of exceptional easing. With the anticipated further withdrawal of stimulus by advanced economies, EMDE policymakers need to remain alert to the potential for adverse spillovers even while pursing policies to support strong, sustained growth," the paper said.
According to the World Bank, "a broad-based cyclical global recovery is underway, aided by a rebound in investment and trade, against the backdrop of benign financing conditions, generally accommodative policies, improved confidence, and the dissipating impact of the earlier commodity price collapse." Analysts expect global growth to be sustained over the next couple of years and "even accelerate somewhat in emerging market and developing economies (EMDEs) thanks to a rebound in commodity exporters." "Although near-term growth could surprise on the upside, the global outlook is still subject to substantial downside risks, including the possibility of financial stress, increased protectionism, and rising geopolitical tensions. Particularly worrying are longer-term risks and challenges associated with subdued productivity and potential growth. With output gaps closing or already closed in many countries, supporting aggregate demand with the use of cyclical policies is becoming less of a priority. Focus should now turn to the structural policies needed to boost potential growth and living standards," the report said.