The world real Gross Domestic Product (GDP) growth reduced to 3.1 percent in the year 2015 from 3.4 percent in the year 2014. This is according to an economic survey released by Kenya National Bureau of Statistics, KNBS, called Economic Survey 2016. According to the report, the decrease in the global GDP was as a result of low commodity prices, weaker capital flows, subdued global trade and increasing financial market, volatility particularly in emerging markets and developing economies.
The report also indicates that the advanced economies experienced a modest economic recovery, mainly driven by stronger domestic demand as labour markets and credit conditions improved. The economic growth in Sub-Saharan Africa (SSA) slowed from 5.1 percent GDP growth in 2014 to 3.8 percent growth in 2015. This was attributed to the weak global economic growth and lower commodity prices.
The report goes on to say that there was a slowed growth of 3.4 percent in 2015 from 5.8 percent in 2014 in the East Africa Community (EAC). This was mainly associated with political instability in Burundi and uncertainties associated with general election in Tanzania and Uganda. The devastating impact of Ebola in some West African countries was reflected in the Economic Community of West African States (ECOWAS) growth that decelerated to 4.0 percent in 2015 compared to 6.0 percent in 2014.
Global inflation rate eased from 3.5 percent in 2014 to 3.3 percent in 2015. This was attributed to a decline in international oil and other commodity prices. High supplies and weak demand for commodities contributed to the lowering of most commodity prices. Lower crude oil prices caused by sluggish demand were driven by expectations of slowing global growth particularly in the emerging markets and developing economies. Similarly, the revolution in technology in the United States (US) and Canada led to increased global oil production. This led to a reduction in the import of oil in the US, thereby contributing to the fall in oil prices.
The Murban ADNOC crude oil price averaged at $52.53 per barrel in 2015, a decline from $ 99.46 per barrel in 2014. The world merchandise trade volume grew by 3.2 per cent in 2015 compared to an increase of 3.3 percent in 2014. This performance was due to a slump in import volumes in both emerging markets and developing economies, reflecting both weaker demand in growth and reduction in the intensity of imports.
Despite narrowing of the global current account imbalances, current account deficits remained relatively high in many economies. World current account balance stood at 0.3 percent of GDP in 2015 relative to 0.4 per cent of GDP in 2014. However, SSA’s current account balance recorded a deficit of 5.7 percent in 2015 compared to a deficit of 2.6 percent of GDP in 2014. This was on account of reduced export revenues, especially for the commodity exports.
The emerging markets and developing economies current account balance recorded a surplus of 0.1 percent of the GDP in 2015.
OECD countries fiscal deficits improved from 3.8 percent of GDP in 2014 to 3.3 percent in 2015. High fiscal deficits in SSA economies were due to falling commodity prices, geopolitical tensions, rising infrastructural spending and construction of mining projects. Over the review period, global unemployment rate decelerated to 5.8 per cent in 2015, mainly occasioned by the sluggish global economic performance. Total global unemployment.
Article by Juma Fred.