Prospects for the Global Economy

Outlook summary
Turmoil in financial markets, slower growth in high-income countries, and rising inflation have all adversely affected growth prospects for developing countries over the near term. Most countries have shown impressive resilience in this turbulent environment. Growth in developing countries as a group is expected to moderate slightly, with GDP outturns likely to differ substantially across regions, and vulnerable countries that depend on foreign capital flows likely to experience a sharper slowdown.

Forecast summary
A table summarizing the forecast. More detailed information is available here.

Global growth
The slowdown in the United States and in much of Europe has intensified since the end of 2007, and GDP for the high-income members of the Organization for Economic Cooperation and Development (OECD) is projected to slow a full percentage point in 2008. Growth in developing countries is projected to slow in 2008, but it will remain well above the average gains of the last two and a half decades. More...

World trade
The rapid increase in developing country market share over the last fifteen years means that developing countries themselves have become a driving force underlying the global trade cycle, reducing (but certainly not eliminating) the influence of high-income countries. More...

Commodity markets
Prices of internationally traded food commodities are expected to decline from recent record highs but remain strong relative to historical levels. Energy prices are likely to remain at elevated levels; new mandates will increase biofuel use in Europe and the United States, while trade restrictions prevent the full utilization of large potential for ethanol production in Brazil. More...

Risks
The risks to the economic outlook have been elevated by the turmoil that has disrupted financial markets since mid-2007, and they have clearly shifted to the downside, with the key risk being that the deterioration in global economic and financial conditions will become more severe and prolonged. More...

Regional outlooks
In contrast with the high-income countries where GDP growth eased from 3 percent in 2006 to 2.6 percent in 2007, gains for developing countries as a group picked up modestly to 7.8 percent from 7.6 percent in the year. Growth stepped up across all developing regions during 2007, with the exceptions of Europe and Central Asia and South Asia. More...