If you just read the headlines, you would get the impression that 2016 was going to be a shocking year for the emerging economies. In reporting the World Bank's just-published forecasts, the Financial Times headline was 'Grim year forecast for developing nations', while The Guardian headline was 'World Bank issues "perfect storm" warning for 2016'.
If you looked at the World Bank's actual forecast, you'd find that growth of 4.8% is predicted for 2016, 0.5% higher than the estimated growth rate for 2015. You might also note that the emerging economies are growing at well over twice the pace of the high-income economies.
It's apparently very hard for a newspaper to publish an article with a headline saying that things are jogging along as usual. This bias does matter, as it adds weight to the gloomy commentary of financial market, always more concerned about the down-side risk than the up-side. And what happens in the emerging economies is now much more important for the rest of us. The IMF's new Chief Economist, Maury Obstfelt, put the importance of emerging economies this way:
During the 1980s, emerging and developing economies accounted for around 36 percent of global GDP (measured in purchasing power parity, or PPP, terms) and some 43 percent of global GDP growth (with PPP weights). For 2010-2015, the numbers were 56 percent and 79 percent, respectively. So a predominantly advanced-economy lens for viewing the world economy has become ever more outmoded.
All this hand-wringing over emerging-economy growth prospects raises another issue. Why not get the IMF, World Bank and UNDP to consolidate their forecast teams, rationalise the numbers and put the spare forecasters onto some productive work?
Photo by Flickr user wackystuff.