Chapter 1. Rebuilding the value of labour and promoting global rebalancing
1.1 Slow, fragile and unbalanced recovery of the global economy
World economic recovery has split into three speeds. We have moved from a “two-speed” recovery to a “three-speed” recovery.
——IMF, April 2013
The global economy continues to recover, led by developing countries and emerging economies, due to the stimulus policies of different economies and with the easing of the European debt crisis and the averting of the “fiscal cliff” in the United States.
However, the foundation for recovery is still fragile: the pace is faltering and there are obvious signs of imbalances.
1.1.1 Global economic recovery is still tottering
Global economic recovery has further slowed down due to the lacklustre economic situation, the weakening effects of stimulus policies and the impact of economic restructuring in emerging economies and developing countries.
According to the International Money Fund(IMF) prognoses of July 2013,[ IMF, World Economic Outlook Update, July 2013. ] the growth rate of world output for 2013 is expected to be 3.1%, the same level as in 2012. It is forecast to reach 3.8% in 2014, 0.1 percentage points less than in 2011. The growth rate for emerging and developing economies is predicted to be 5% in 2013, only 0.1 percentage points higher than in 2012, and then to reach 5.4% in 2014. The growth rate for the US is foreseen to be 1.7% in 2013, 0.5 percentage points lower than in 2012, reaching 2.7% in 2014. The economy of the Eurozone continues to shrink in 2013. Its growth rate is expected to remain at –0.6% as in 2012, before turning positive to reach 0.9% in 2014. It is worth noting that the IMF obviously toned down its forecasts in July compared with January: the predicted growth rate of world output in 2013 is 0.4 percentage points lower, while for 2014 it is 0.2 percentage points lower. Growth rates in emerging markets and developing economies were scaled down by 0.5 and 0.4 percentage points respectively. US growth rates for 2013 and 2014 were reduced by 0.4 and 0.3 percentage points. Those of the Eurozone for the same two years were cut by 0.4 and 0.1 percentage points.
It was no coincidence that in June 2013 the World Bank also revised downward its forecast for global economic growth. It pointed out that despite decreasing fluctuations in the global economy, given the shrinking economy of the Eurozone and the impact of economic slowdown in some developing countries, the pace of global economic growth would slow further. The Bank therefore revised its expectations for global economic growth downwards. It forecast global economic growth of 2.2% in 2013, lower than the 2.3% of 2012 and the January forecast of 2.4%. Its forecast for global economic growth in 2014 was 3.0%, 0.1 percentage points lower than the January forecast. In particular, its forecast growth rate for high-income countries in 2013 was 1.2%, 0.1 percentage points lower than the January estimate. Its forecast for developing countries in 2013 was 5.1%, much lower than the previous prediction of 5.5%. Its forecasts for 2014 and 2015 were also 0.1 percentage points lower than before.[World Bank, Global Economic Prospects, June 2013.]