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The world economy
continued to recover in 2004 from the
slowdown of 2000–01. Gross domestic
product (GDP) rose 4.1 percent, more
than a full percentage point higher
than in 2003 and the fastest rate of
growth of global output in 15 years.
High-income economies grew at an
average annual rate of 3.4 percent,
while developing countries averaged a
remarkable 7.1 percent, the highest
rate of growth since 1970. |
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recovery has been widespread throughout
the developing world. East Asia and
Pacific grew fastest—9 percent over
2003. But all regions grew at nearly 6
percent or higher, except Sub-Saharan
Africa, which grew at 4.8 percent.
Fourteen countries registered growth
rates of 10 percent or higher, and only
four countries experienced negative
growth (figure 4a). Many of the fastest
growing economies are oil and gas
producers and exporters, which benefited
from the run-up in energy prices. Iraq’s
GDP increased more than 40 percent after
four years of falling output, and Chad’s
grew by 30 percent. |
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Source: World Bank data files. |
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The high growth throughout the
developing world in 2004 was due in part
to increased prices of primary
commodities and supportive monetary
conditions. Increases in the prices of
oil, metals and minerals, and
agricultural commodities boosted growth
in a wide range of commodity producers.
Oil prices rose 30 percent in 2004 even
as production increased. While higher
oil revenues were responsible for strong
economic performance by oil producers,
the impact on oil-importing countries
was cushioned by increased volumes and
prices of other primary commodities. For
example, Brazil, an oil-importing
country, achieved a growth rate of 4.9
percent in 2004. Argentina, Brazil, and
South Africa saw their barter terms of
trade improve by 10–20 percent over 2000
(table 6.2). |
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Meanwhile, global short-term interest
rates declined sharply as major central
banks reduced policy rates to support
economic expansion. Inflation rates
remained low, however, because of
improved fiscal and monetary discipline.
The median inflation rate was below 10
percent in all regions, well below the
average of about 15 percent or higher in
1990 in three regions (table 4b). The
number of countries with double-digit
inflation was 38, the same as in 2003
despite the oil price hikes. The
combination of reduced global interest
rates and stable or falling inflation
led to substantial declines in real
interest rates (table 4c). |
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| | East Asia |
5.8 |
7.9 |
2.5 |
3.9 |
5.7 |
| | Europe & Central Asia |
14.8 |
46.4 |
8.5 |
4.7 |
6.1 |
| | Latin America & Caribbean |
21.2 |
11.0 |
5.2 |
6.5 |
7.6 |
| | Middle East & North Africa |
17.0 |
9.4 |
9.8 |
5.9 |
9.6 |
| | South Asia |
8.5 |
9.1 |
4.6 |
4.5 |
5.0 |
| | Sub-Saharan Africa |
9.7 |
10.7 |
6.1 |
6.5 |
6.0 |
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Source: World Bank data files and table
4.14. |
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| | Brazil |
44.7 |
46.7 |
47.8 |
45.3 |
43.2 |
| | China |
3.7 |
3.7 |
4.7 |
2.6 |
–1.2 |
| | India |
8.2 |
8.4 |
7.4 |
8.0 |
5.4 |
| | Japan |
3.6 |
3.3 |
3.2 |
3.2 |
4.0 |
| | Mexico |
4.3 |
6.5 |
1.2 |
–1.5 |
1.1 |
| | Russian Federation |
–9.6 |
1.2 |
0.2 |
–0.9 |
–5.6 |
| | United States |
6.9 |
4.4 |
3.0 |
2.2 |
1.7 |
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| Note: Real interest
rates are computed as the difference
between the prime rate charged by banks and the rate of inflation
measured by the growth of the GDP
deflator. |
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Source:World Bank data files and table
4.13. |
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Although growth was higher in most
regions in 2000–04 than in the
preceding decade, the continuing
recovery in Sub-Saharan Africa remains
one of the most remarkable stories of
the past five years (figure 4d). By
2004 the region had experienced five
years of continuous positive growth in
per capita incomes, after two decades
of decline (except for a slight
increase in 1997). Increasing prices
of primary commodities, particularly
oil, but also important agricultural
crops, get much of the credit. Oil and
natural gas producers achieved very
rapid growth, including Chad and
Equatorial Guinea, where GDP rose more
than 10 percent, and Nigeria, where
GDP increased 6 percent. Countries
left out of the commodity boom such
as Central African Republic, Côte
d’Ivoire, Eritrea, and Niger have done
less well, with growth below 2
percent. Average rates of investment
have also risen: from 17 percent of
GDP in 2000 to 19 percent in 2004,
reversing the falling trend of the
1980s and 1990s. |
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Average annual growth of GDP (%) |
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Source: World Bank data files. |
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But even at this broad regional level
Sub-Saharan Africa’s macroeconomic
indicators remain weak, with the
lowest regional gross savings rates,
at 16 percent of GDP, and the highest
government consumption rate, at 17
percent. And despite a few years of
economic growth, Sub-Saharan Africa
still has the highest poverty rate in
the world. A large proportion of the
population in more than half the
countries in Sub-Saharan Africa is
still in need of food aid according to
the World Food Programme. |
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Strong growth of 5 percent in Europe
and Central Asia in 2000–04 was also
assisted by higher oil prices. GDP in
the Middle East and North Africa rose
3.8 percent over the period, about the
same as in the 1980s and 1990s, again
driven by increasing oil prices. But
East Asia and Pacific, which has grown
at about 8 percent a year during the
past 20 years, continues to be the top
performer. The region’s exceptional
performance was due largely to rapid
growth in China. Similarly strong
performance by India enabled South
Asia to grow at nearly 6 percent over
the same period. Despite rapid growth
in 2004, Latin America and the
Caribbean is the only region that
failed to improve on growth rates of
the 1990s because of low or negative
growth in 2001 and 2002. |
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In achieving consistently high rates
of growth over a long period, India
and China have become more important
in the world economy, as both
consumers and producers. Growth has
brought increasing demand for energy
inputs, and growing imports of fuel
have been blamed for rising fuel
prices. But too much may be made of
this. While China and India are now
among the top 10 fuel importers and
account for a large share of the
increased demand for oil, they remain
relatively small consumers compared
with the major industrial countries.
China and India accounted for only
about 11 percent of the global
increase in fuel imports between 2000
and 2004, whereas the United States
alone accounted for 20 percent (table
4e). And in both China and India the
share of fuel in merchandise imports
has declined slightly since 2000. |
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| | Brazil |
7 |
9 |
12 |
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12.1 |
15.1 |
18.8 |
40 |
1 |
| | China |
5 |
21 |
48 |
|
3.9 |
9.2 |
8.5 |
131 |
7 |
| | India |
8 |
19 |
34 |
|
23.8 |
36.7 |
34.6 |
78 |
4 |
| | Japan |
54 |
77 |
99 |
|
16.1 |
20.4 |
21.7 |
28 |
6 |
| | United States |
63 |
140 |
216 |
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8.2 |
11.1 |
14.2 |
55 |
20 |
| | European Union |
136 |
219 |
347 |
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6.5 |
8.8 |
9.4 |
59 |
33 |
| | World |
386 |
690 |
1,075 |
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7.4 |
10.4 |
11.5 |
56 |
100 |
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Source:World Bank data files. |
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Interest and exchange rate indicators
(table 5.7), which used to appear in
section 5, States and markets, have
moved to the Economy section,
resulting in an additional table on
monetary indicators (table 4.14),
while the table showing growth in
merchandise trade and terms of trade
(table 4.4) has moved to section 6,
Global links (table 6.2). Economy now
shows the growth of exports and
imports of goods and services from the
national accounts data. Household
final consumption expenditure in
dollar terms has been dropped from
table 4.8. However, these data are
still available on the World
Development Indicators CD-ROM and
World Development Indicators Online
database. In table 4.8 gross savings,
which has been changed to conform to
the System of National Accounts
definition, now includes net income as
well as transfers. In table 4.14 the
food price index data, which were
inconsistent with the consumer price
index data from the International
Monetary Fund’s International
Financial Statistics, were replaced by
wholesale price index data from the
International Financial Statistics.
Total debt service ratios replace
public and publicly guaranteed debt
service ratios in table 4.17. |
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Recently, the national accounts
of China have been revised by
the National Bureau of
Statistics (NBS), incorporating
new information from the 2005
National Economic Census. The
earlier economic census was
taken in 1993. |
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As the information from the 2005
census has been incorporated,
the revised national accounts
have for the first time been
able to capture the growing
private sector, including the
services industry. The revised
accounts show not only that the
size of the economy is larger,
but also that it is growing at a
slightly higher rate then
previously shown. |
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The NBS has not only revised the
estimates for 2004, but has also
revised time series back to
1993. So far, however, revised
data are available only for
production. The old data are
retained here for the
expenditure accounts, and the
differences are shown as a
statistical discrepancy. As a
result of this large statistical
discrepancy final household
consumption is larger than it
will be when the final set of
data is released. While the
constant price series for the
years before 1993 were scaled
upward using the previous growth
rates to yield a consistent
series for calculating long-term
growth trends, the current price
series contains a break in the
series in 1993, as current price
data beyond 1993 are unadjusted. |
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As a result of the revision,
Chinese GDP for 2004 is about
$1.93 trillion, some 17 percent
higher than earlier published
estimates. In real terms the
economy grew at 10.1 percent,
slightly higher than the
previously published growth
data. By the revised value-added
estimates the service sector
accounts for 41 percent of the
economy, up from earlier
estimates of 37 percent, and the
industrial sector has declined
from 49 percent to 46 percent,
and agriculture from 14 percent
to 13 percent. By the old data
China’s manufacturing sector was
the fastest growing sector,
contrary to trends in emerging
economies like India, where the
service sector has been growing
faster. Now though still lower,
the service sector is growing at
almost the same rate as the
manufacturing sector, nearly 10
percent in 2004. |
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China was
ranked sixth in the global
economy based on gross national
income (GNI) in the last two
editions of the World
Development Indicators. The
revised GNI estimates move China
ahead of France to become the
fifth largest economy in 2004
and, according to projections,
will move it ahead of the United
Kingdom next year to become the
fourth largest. While still a
lower-middle-income country,
China has a more important role
in the global economy than many
of the largest industrial
countries. For example, China is
the fourth largest receiver of
foreign direct investment, its
reserves are second only to
those of Japan, and its
merchandise exports in dollar
terms exceed all countries
except Germany and the United
States. |
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