11 Jun 2012

WORLD BANK / GLOBAL ECONOMIC PROSPECTS

The World Banks latest Global Economic Prospects says that due in part to the worrisome situation in Europe, developing countries should prepare for a long period of volatility in the global economy. WORLD BANK

Posted at: June 11, 2012 4:23 pm

Duration: 01:58

Available in: SD

DOWNLOAD

Full script

STORY: WORLD BANK/ GLOBAL ECONOMIC PROSPECTS
TRT: 1.58
SOURCE: WORLD BANK / IMF / ILO 
RESTRICTIONS: NONE
LANGUAGE: ENGLISH / FRENCH / NATS

DATELINE: 11 JUNE 2012, WASHINGTON DC

SHOTLIST:

FILE – IMF - RECENT, ATHENS, GREECE

1. Wide shot, Alpha Bank

FILE – IMF - RECENT, BRUSSELS, BELGIUM

2. Wide shot, KBC Bank

RECENT, SAO PAOLO, BRAZIL

3. Wide shot, busy street

11 JUNE 2012, WASHINGTON DC

4. SOUNDBITE (English) Andrew Burns, Manager of Global Macroeconomics and lead author of the report, World Bank Group:
"Well certainly these are difficult times, economic times, in the world. The situation in Europe is very worrisome. In the projections we make in the Global Economic Prospects we expect that situation not to get out of hand and as a result developing countries should be able to have decent growth in 2012, about 5.3 percent, strengthening to around 6 percent in 2013 and 2014."

FILE – IMF - RECENT, LONDON, UNITED KINGDOM

5. Med shot, Swedbank building

11 JUNE 2012, WASHINGTON DC

6. SOUNDBITE (English) Andrew Burns, Manager of Global Macroeconomics and lead author of the report, World Bank Group
"Although we don't see it as a baseline scenario, it certainly is possible that the situation in high income Europe deteriorates significantly and if it did that would have very serious impacts on developing countries. What we suggest is that countries take the time now to try to replenish some of those cushions, some of those buffers, that they used in 2008 and 2009 so successfully to recover from that crisis, try and rebuild those now by bringing policy to a more neutral stance, reducing deficits, so that they have the ammunition to respond if a crisis, a second crisis, announces itself."

FILE – IMF - 2011, ATHENS, GREECE

7. Zoom out, from locked door to store front
8. Wide shot, boarded up shop

11 JUNE 2012, WASHINGTON DC

9. SOUNDBITE (French) Andrew Burns, Manager of Global Macroeconomics and lead author of the report, World Bank Group:
"The situation now is obviously very uncertain, there is a lot of volatility in the markets, but also in public perception, and this will undoubtedly impact on growth in developing countries. To develop our base scenario we count on growth of around 5.3 percent for developing countries in 2012, which should accelerate to 6 percent in 2013-2014."

FILE – ILO - 21-22 MAY 2012, FREIBURG, GERMANY

10. Various shots, city scenes

STORYLINE:

Developing countries should prepare for a long period of volatility in the global economy by re-emphasizing medium-term development strategies, while preparing for tougher times, says the World Bank in the newly-released Global Economic Prospects (GEP), June 2012.

A resurgence of tensions in high-income Europe has eroded the gains made during the first four months of this year, which saw a rebound in economic activity in both developing and advanced countries and an easing of risk aversion among investors. Since 1 May, increased market jitters have spread. Developing and high-income country stock markets have lost some 7 percent, giving up two-thirds of the gains generated over the preceding four months. Most industrial commodity prices are down, with crude and copper prices down by 19 and 14 percent, respectively, while developing country currencies have lost value against the US dollar, as international capital fled to safe-haven assets, such as German and U.S. government bonds.

SOUNDBITE (English) Andrew Burns, Manager of Global Macroeconomics and lead author of the report, World Bank Group:
"Well certainly these are difficult times, economic times, in the world. The situation in Europe is very worrisome. In the projections we make in the Global Economic Prospects we expect that situation not to get out of hand and as a result developing countries should be able to have decent growth in 2012, about 5.3 percent, strengthening to around 6 percent in 2013 and 2014."

So far, conditions in most developing countries have not deteriorated as much as in the fourth quarter of 2011. Outside of Europe and Central Asia and the Middle-East and North Africa, developing country credit default swap (CDS) rates, a key indicator of market sentiment, remain well below their maximums from the fall of 2011.

SOUNDBITE (English) Andrew Burns, Manager of Global Macroeconomics and lead author of the report, World Bank Group
"Although we don't see it as a baseline scenario, it certainly is possible that the situation in high income Europe deteriorates significantly and if it did that would have very serious impacts on developing countries. What we suggest is that countries take the time now to try to replenish some of those cushions, some of those buffers, that they used in 2008 and 2009 so successfully to recover from that crisis, try and rebuild those now by bringing policy to a more neutral stance, reducing deficits, so that they have the ammunition to respond if a crisis, a second crisis, announces itself."

Increased uncertainty will add to pre-existing headwinds from budget cutting, banking-sector deleveraging and developing country capacity constraints. As a result, the World Bank projects that developing country growth will slow to a relatively weak 5.3 percent in 2012, before strengthening somewhat to 5.9 percent in 2013 and 6.0 percent in 2014. Growth in high-income countries will also be weak, 1.4, 1.9 and 2.3 percent for 2012, 2013 and 2014 respectively – with GDP in the Euro Area declining 0.3 percent in 2012. Overall, global GDP is projected to rise 2.5, 3.0 and 3.3 percent for the same period.

SOUNDBITE (French) Andrew Burns, Manager of Global Macroeconomics and lead author of the report, World Bank Group:
"The situation now is obviously very uncertain, there is a lot of volatility in the markets, but also in public perception, and this will undoubtedly impact on growth in developing countries. To develop our base scenario we count on growth of around 5.3 percent for developing countries in 2012, which should accelerate to 6 percent in 2013-2014."

This baseline scenario remains the most likely outcome. However, should the situation in Europe deteriorate sharply no developing region would be spared. Developing Europe and Central Asia is especially vulnerable because of its close trade and financial ties with high-income Europe, but the world's poorest countries will also feel the fall out – especially countries that are heavily reliant on remittances, tourism or commodity exports or that have high-levels of short-term debt.