{"id":34151,"date":"2023-03-30T06:40:33","date_gmt":"2023-03-30T01:10:33","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=34151"},"modified":"2025-04-20T09:25:23","modified_gmt":"2025-04-20T03:55:23","slug":"why-2020-2030-has-the-makings-of-a-lost-decade-for-the-global-economy","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/why-2020-2030-has-the-makings-of-a-lost-decade-for-the-global-economy\/","title":{"rendered":"Why 2020-2030 has the makings of a Lost Decade for the Global Economy"},"content":{"rendered":"<h3><strong>What\u2019s in today\u2019s article?<\/strong><\/h3>\n<ul>\n<li><strong>Why in News?<\/strong><\/li>\n<li><strong>Key Highlights of the Report<\/strong><\/li>\n<li><strong>Reasons for the Slowdown<\/strong><\/li>\n<li><strong>Observations about India<\/strong><\/li>\n<li><strong>What can be done to boost potential Global Growth?<\/strong><\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>\u00a0Why in News?<\/strong><\/h2>\n<ul>\n<li>The <strong>World Bank<\/strong>, recently, published a report titled \u201cFalling Long-Term Growth Prospects: Trends, Expectations, and Policies\u201d.<\/li>\n<li>The report offers the first <i><strong>comprehensive assessment of long-term potential output growth rates<\/strong><\/i> in the aftermath of the COVID-19 Pandemic and the Russian invasion of Ukraine.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>Key Highlights of the Report<\/strong><\/h2>\n<ul>\n<li>The report \u201c<strong>Falling Long-Term Growth Prospects: Trends, Expectations, and Policies<\/strong>\u201d is published by the <strong>World Bank<\/strong>.<\/li>\n<li>The report uses a comprehensive database of multiple measures of potential growth.<\/li>\n<li>It examines trends in potential growth and its drivers, global and regional prospects for potential growth and investment over the 2020s, and a range of policy options to lift potential growth.<\/li>\n<li><strong>It documents three major findings \u2013<\/strong>\n<ul>\n<li><strong>First<\/strong>, there has been a protracted, broad-based decline in potential growth and its underlying drivers.<\/li>\n<li>Major adverse shocks also reduce potential growth by leaving a lasting impact on these drivers.<\/li>\n<li><strong>Second<\/strong>, the slowdown in potential growth is expected to persist for the rest of this decade.<\/li>\n<li><strong>Third<\/strong>, while they are significant challenges confronting <strong>emerging market and developing economies (EMDEs)<\/strong>, they are not insurmountable.It is possible to reverse the slowdown in potential growth and chart a sustained, sustainable, and inclusive growth path by implementing ambitious, broad-based and forceful policies at the national and global levels.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>Reasons for the Slowdown<\/strong><\/h2>\n<ul>\n<li>The biggest reason for the slowdown is that the EMDEs are in the midst of a prolonged period of weakness.<\/li>\n<li>The following table shows a broad-based decline over the past two decades whether a country belongs to EMDEs or the middle-income countries (MICs) or the low-income countries (LICs).<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/lh3.googleusercontent.com\/TbhtxfaddPv0uHMyEaQGdhQHOuGzzgUDqFvVNw04CPW_XiD4AIImRr2zY9wJJN5Ja9CEvfev5gi9wf2VzKqk8PxF3Lmo0XtT-nGHoYrXK5kBOzAlhmbuGUzngvSnANW3HEPxTtnhxk8V1mcuNSd_eBU\" alt=\"\" \/><\/p>\n<p>Image Caption: Decline in economic growth of countries<\/p>\n<ul>\n<li>The <i><strong>World Bank has looked at a whole set of fundamental drivers that determine economic growth and found that all of them have been losing power<\/strong><\/i>.<\/li>\n<li>These fundamental drivers include things like \u2013\n<ul>\n<li>Capital accumulation (through investment growth),<\/li>\n<li>Labour force growth, and<\/li>\n<li>Growth of total factor productivity (which is the part of economic growth that results from more efficient use of inputs and which is often the result of technological changes) etc.<\/li>\n<\/ul>\n<\/li>\n<li>Not surprisingly then, the <i><strong>potential growth rate is expected to decelerate further<\/strong><\/i>.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>Observations about India<\/strong><\/h2>\n<ul>\n<li>Even though India has also lost its growth momentum over the past two decades, it is and <i><strong>will likely remain a global leader when it comes to growth rates<\/strong><\/i>.<\/li>\n<li>India falls under the <strong>South Asia Region<\/strong> (SAR), which is expected to be fastest growing among emerging market and developing economies for the remainder of this decade.<\/li>\n<li>To be sure, <i><strong>India accounts for three-fourths of the SAR output<\/strong><\/i>.\n<ul>\n<li>SAR includes countries like Afghanistan, Pakistan, Sri Lanka, Nepal and Bangladesh etc.<\/li>\n<\/ul>\n<\/li>\n<li>Economic activity in the SAR rebounded strongly from the recession caused by the COVID-19 pandemic, <i><strong>expanding by 7.9 percent in 2021<\/strong><\/i>.<\/li>\n<li>Output in the region is on track to grow by about 6.0 percent a year between 2022 and 2030, faster than the 2010s annual average of 5.5 percent.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>What can be done to boost potential Global Growth?<\/strong><\/h2>\n<ul>\n<li>The report highlights <i><strong>specific policy actions at the national level<\/strong><\/i> that can make an important difference in promoting long-term growth prospects.\n<ul>\n<li><strong>Align monetary, fiscal, and financial frameworks \u2013<\/strong>\n<ul>\n<li>Robust macroeconomic and financial policy frameworks can moderate the ups and downs of business cycles.<\/li>\n<li>Policymakers should prioritize <i><strong>taming inflation<\/strong><\/i>, ensuring <i><strong>financial-sector stability<\/strong><\/i>, <i><strong>reducing debt<\/strong><\/i>, and restoring <i><strong>fiscal prudence<\/strong><\/i>.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Ramp up investments \u2013<\/strong>\n<ul>\n<li>Transportation and energy, climate-smart agriculture and manufacturing, and land and water systems.<\/li>\n<li>In the above mentioned areas, <i><strong>sound investments aligned with key climate goals could enhance potential growth by up to 0.3 percentage point per year<\/strong><\/i>.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Cut trade costs \u2013<\/strong>\n<ul>\n<li>Trade costs\u2014mostly associated with shipping, logistics, and regulations\u2014effectively double the cost of internationally traded goods today.<\/li>\n<li>Countries with the highest shipping and logistics costs could cut their trade costs in half by <i><strong>adopting the trade-facilitation<\/strong><\/i> and other practices of countries with the lowest shipping and logistics costs.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Capitalize on services \u2013\u00a0<\/strong> \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\n<ul>\n<li>The services sector could become the new engine of economic growth.<\/li>\n<li>Exports of digitally delivered professional services related to information and communications technology climbed to more than 50% of total services exports in 2021, up from 40%in 2019.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Increase labor force participation \u2013<\/strong>\n<ul>\n<li>About half of the expected slowdown in potential GDP growth through 2030 will be attributable to changing demographics.<\/li>\n<li>This change includes a <i><strong>shrinking working-age population and declining labor force participation as societies age<\/strong><\/i>.<\/li>\n<li>Boosting overall labor force participation rates by the best ten-year increase on record could increase global potential growth rates by as much as 0.2 percentage point a year by 2030.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li>The report also underscores the need to strengthen global cooperation.<\/li>\n<li>International economic integration has helped to drive global prosperity for more than two decades since 1990, but it has faltered.<\/li>\n<li>Restoring it is essential to \u2013\n<ul>\n<li><i><strong>Catalyse trade<\/strong><\/i>,<\/li>\n<li><i><strong>Accelerate climate action<\/strong><\/i>, and<\/li>\n<li><i><strong>Mobilize the investments<\/strong><\/i> needed to achieve the Sustainable Development Goals.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3><strong>Q1) What is the meaning of Economic Stagnation?<\/strong><\/h3>\n<p>Economic stagnation is a prolonged period of slow economic growth, usually accompanied by high unemployment.<\/p>\n<p>&nbsp;<\/p>\n<h3><strong>Q2)<\/strong> <strong>When was World Bank established?<\/strong><\/h3>\n<p>The IMF and the World Bank were created in July <strong>1944<\/strong> at an international conference in the United States (in Bretton Woods, New Hampshire) that established a framework for economic cooperation aimed at creating a more stable and prosperous global economy.<\/p>\n<p>&nbsp;<\/p>\n<hr \/>\n<p><strong>Source:\u00a0<\/strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/global-economy-recession-2020-2030-decade-8524701\/\" target=\"_blank\" rel=\"nofollow noopener\"><u>ExplainSpeaking | Why 2020-2030 has the makings of a lost decade for the global economy<\/u><\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The World Bank has recently published a report on global economic prospects for 2020-2030.<\/p>\n","protected":false},"author":5,"featured_media":34152,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-34151","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/34151","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=34151"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/34151\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/34152"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=34151"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=34151"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=34151"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}