Global Growth Gets a Downgrade

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We all knew just how wrong it was as we sat there and listened to the World Bank going on in January about how world economic growth would top 3.2%. Today the World Bank has downgraded economic growth to 2.8%, which some might say is even over the odds. But, they can blame it all on Ukraine and the conflict over Crimea as the reason for the worsening of the situation. Does anybody actually trust or believe in the World Bank these days?

The World Bank is based in Washington and provides loans as a United Nations Organization agency to developing (and those that are supposedly developed but that are up the creek without anything like a paddle to get them out of it). The bank’s Vice President and Chief Economist Kaushik Basu said in a press conference today that “We are not entirely out of the woods”. Some might say that the clearing is nowhere in sight for the moment and no end of positive thinking will not bring about a turn in the economy.

• The World Bank has urged countries such as IndiaKenyaMalaysia and South Africa to tighten fiscal policy and to step up structural reforms, downgrading their economic growth (developing countries) from 5.3% to 4.8%.
• The poorest 40% of the developed world are still not seeing stable jobs being created. 
• The President of the World Bank Jim Yong Kim stated: “Countries need to move faster and invest more in domestic structural reforms to get broad-based economic growth to levels needed to end extreme poverty in our generation”. 
• The World Bank believes that the financial markets will remain anxious and this will have severe consequences in the face of central banks making the move towards the end of quantitative easing and loose monetary policy, as well as an increase in rate increases. 
• When interest rates get raised there will be a pull-back in liquidity. 
• The US growth rate has been dropped from 2.8% to 2.1% now.
• Of course it has nothing to do with the policies of the US government but the weather conditions experienced during the winter months (when gross domestic product fell by 1% in the 1st quarter this year). 
• Developed economies are estimated to contribute around 50% of global growth in the coming two years; whereas they made up for around 40% last year. 
• The World Bank sees current account deficits declining and cash flow improving towards emerging markets. In emerging markets government deficits are over 3% of GDP and debt-to-GDP ratios have risen by 10%since 2007.

But, having said all of that it is surprising that the All-America Economic Survey believes in the latest figures published that Americans believe that they have a favorable opinion of the economy and their outlook in the country.

• They have even gone as far as to say that 91% of Americans are back to where they were regarding optimism in comparison with pre-crisis levels in March 2007 (concerning home prices and whether or not they will increase in the coming year, for example). 
• Although there are only 18% of Americans that believe that the economy is excellent. 
• Americans also believe that it is better to invest in real estate projects today than in gold. 
Gold had previously been the number one choice, but today it is in third position. 
38% believe they will get a pay increase within the next twelve months. 
• Only over a third (33%) of respondents believed that the economic situation in the country was bad.
• 28% believe that it will in fact get worse. 
• 40% of Americans believe that it will remain the same. 
• The survey was conducted d last week and there were 815 people polled (with a margin of error of 3.4%).

Oh, how blind we can be o the detriments of the real estate market. As long as the price of houses is increasing, the people are happy. One day, as we already have discovered, prices stop going up and come tumbling down on their heads, however. Nothing has changed. The last stock-market induced housing bubble was just a dress rehearsal for this time around.

The World Bank stated that “now is the time to prepare for the next crisis”. If we have the time, that is.

Originally posted: Global Growth Gets a Downgrade

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AmCockerSpaniel's picture

QE QE QE..... Does anyone see the Fed buying a controlling interest in these big companies? Who or what is the only interest that

the Fed can unload all those shares on??  The US government? That would be nationalizing ALL the major companies in America!

Now that will never happen, RIGHT? We may live to see slavery again in America, only this time it will not be just one race.

BeetleBailey's picture

My guide for detecting a moron up close, and in person - without a fucking hand held "device" - un-tethered from the net. Someone who I will have only superficial conversations with in the future, based on these five questions.

Feel free to use/add this to your cocktail hour/dinner party patter...

I tell usually no one I am "measuring their brain" with these questions, and slip them into any opening conversation.....

If any person slips up/guesses completely wrong/starts laughing at their own stupidity/thinks it's funny/disagrees vehemently...well....

1. I ask "what country does the US import the most oil from?" (if they get confused right off, a bad sign)

2.  What was a now-proven wrong "ten year projection" called in 2000?

3. What minority is the ONLY minority that has NOT grown in percentage of the US population in 30+ years? ..and the #1 reason why that is...? (follow up)

4. How much does big oil "get" from each dollar a US consumer pays at the pump? How much does the government (f,s,m,l) get?

5. How much "quantitative easing"/printing money, has the FED done since they announced it back in 2011, and what does "buying mortgage backed securities" actually mean?

1). Canada....far and away...(you'd be surprised how many people have no fucking clue. This is always my lead question...if guessed widly wrong, I know it's all downhill from here)

2).What was the "Surplus". Fact & Fiction for 600 Alex.....

They can argue all they want....fact is, they WERE ten year projections....and laughable at that....looking back...down right asinine to even suggest we "had" a "surplus".....over-taxation maybe....

3) African American. 13% in 1980, and 13% in 2010

- bonus points if they know that African Americans (AA) abort 66% of their own babies. FAR AND AWAY, THE #1 reason the percentage has not gone up, which makes any argument from AA that they are somehow "opressed" or disrespected.....moot.

Oddly, AA's get all pissed and nasty when you mention this - and - mention that Fuckbama (I use "Barry" talking to AA's) is ALL FOR MOAR abortions....and you back him!!!! (Gets em even more themselves)

Run by Christian African Americans, this site/issue is the truth that Al, Jesse, Rev. Louis, Opie, Whoopie, et. fuckin al. NEVER discuss.

4) Big Oil? NET?

After ALLLLLLLL the tax breaks and crap, drilling/ approx. 8 cents

Uncle Sugar? 18 cents....GROSS - no "investment". No wildcatting/ "breaks"....

5) Over 4 trillion and counting, and it means buying lousy mortgages from the banks that is basically - another bailout.

IF the rube/douche/Fuckbamavik/Booshdouche tries to argue....I use one retort...

"Look it up/web search that...facts.....are facts".......and then ask them;

"Who won American Idol/DWTS this year"

THAT they know....

fuckin sad


WHAT TWO PLACES have the banks gone with the money given to them by the FED? (Their pockets, and the stock market..follow up to #5)

Who are our states' US senators? (fill in the blanks for your state...usually for them too)

I ask - acting daft "Who is the current US Treasury Secretary ?"

(Back in better days, most everyone knew. Why? THEIR SIGNATURE'S ON THE FUCKING MONEY!!!!!!!!!!!!'d be fuckin surprised. That Jack Lew IS the current SecTreas is .....tragic.)

True or False: (I try to go easy on them)  The government has paid, to date, 175 million dollars in penis pumps.....

True (they usually get this one right....which hamstrings any big government bullshit argument/asinine "well, if it helps.."...but some are just plain fuckin STUPID)  




BOPOH's picture

The breathing metrics can be easily established and breathing tax implemented based on every american air stock consumption. This measure could boost US GDP in to stratosphere. Vote for me my friends and I bring you prosperity: earth for peasants, water for sailors and money for bankers. I am the one you need. Please let me make you happy.

Oldwood's picture

The next recovery is as close as a simple remix on GDP calculations. People doing their own home improvements, mowing the yard, washing the car will soon be apart of the calculation while providing even more jobs for government workers analyzing these metrics to appraise their maximum financial value to our GDP.

Now, if JPM could just figure out how to financialize the future value of our garbage dump's raw material value, we can start another investment boom.

shankster's picture

Can you say world-wide depression baby!

disabledvet's picture

This is so much not a surprise I've been betting on it for over a year now.


Forget Obama...the political facade is not merely crumbling but being BLOWN AWAY.

Support the existing "regime" at your peril.

Interest rates on the ten year at one half of one percent really do sound possible to me now.

The default rates as a consequence will be extraordinary.
Of course "so will the war."

orangegeek's picture

Global economy is shrinking.  China can build only so many empty cities and that ship has now sailed.


Another 1-2 years of adjusting downward.


World Bank - more UN rubbish.

AdvancingTime's picture

We may soon be forced to face our economic Armageddon. The forces that have driven stock markets ever-higher and upward may be beginning to wane. Many markets became distorted years ago when QE and super low interest rates hit the economy in an effort to lessen many of the missteps of recent years.

This has been more helpful in holding up the underlying value of assets and derivatives it now appears than helping to repair a wounded economy. QE has up to now stopped an implosion of derivatives including the resulting contagion and shock that would have spread throughout the financial system. Unfortunately the economy has not fared as well as these asset prices and in many ways these policies have harmed Main Street. More on this subject in the article below.