Name:

ROLLNO Mi18MBA009
MBA 3rd Semester
Submitted To: Ms. Seerat Sultan
Assignment: Economy of Pakistan
Topic: World Economic Trend:
 World Economic Trends During Last 15 years

Economic Trend:

The overall direction in which a nation's economy is moving.

Most business managers need to be aware of the prevailing direction of
the economic trend for the product markets and countries in which they
operate in order to make more accurate and effective plans for their
company.

Explaination of world economic trend:

A near constant flow of cash has

inundated China and other emerging markets. It has lifted those economies,
pulled hundreds of millions of people out of poverty, and dictated corporate
expansion plans worldwide.

About countries of different category are as follow.

Emerging countries: Internal demand is generally firm, but there are signs of
slowdowns in growth, due to decreased capital inflows from foreign countries,
weak recoveries in developed countries resulting in decreased exports, etc. The
slowing recovery of developed countries is affecting their investment and trade,
resulting in slower economies of emerging countries. This indicates that
decoupling has not occurred. A Survey by the IMF staff usually published twice a
year. It presents IMF staff economists' analyses of global economic developments
during the near and medium term.

Developed Countries : Slower recovery pace, due to after-effects of global

financial crisis (excessive household debt, weak housing market, long term
unemployment, etc.), weaker effects of economic stimulation policies, and
financial and capital market instabilities due to European sovereign debt crisis.
Now we explain world economic trend during last fifteen years with other
instruments.
 Real GDP Growth Rate

Over the past two decades, Ethiopia has been made improvements to its
infrastructure and encouraged greater private-sector involvement in an attempt
to transform its agriculture-based economy into a manufacturing hub. 
Turkmenistan’s autocratic government has continued relying on its natural gas
resources but dwindling commodity prices, lack of diversification and an
unfriendly business climate paint the picture of a country now facing an economic
crisis. Exports of cotton, natural gas and gold provide significant revenues to
Uzbekistan, but its government has done little to modernize the economy. China
and India are continuing their march toward domination of the global economy
while Lao and Mongolia are taking a page from their old playbook and turning
themselves into thriving manufacturing hubs. Rwanda, with its extensive
economic development and poverty reduction programs, shows what efficient
and democratic political institutions can do to a country once ravaged by civil war
and genocide: turn it into an economic miracle.
It is not too hard to see which nations have made plans for long and widespread
growth, and which ones draw on finite resources and a business as usual-ways of
doing things. It will be interesting to see how they all fare ten years from now.

The Gross Domestic Product of a country can be defined as the total monetary
value of the goods and services produced within its borders in a year. GDP growth
is expressed as a per cent. The average growth rate has been calculated using the
geometric mean to obtain a ten-year equivalent rate.
Actual and trend growth rates for advanced economies
and emerging market and developing countries:

. growth rates have become much higher in emerging mar- kets than in advanced
economies 4 . Moreover, the trend growth rate of emerging markets has also
increased noticeably and diverged away from the trend growth rate of advanced
economies (see Figure 1). This increased divergence has two important lessons. ...
... we compute the synchronicity measure for each individual emerging market
economy on the one hand, and the same four aggregate groups of advanced
economies on the other hand. Figures 7 to 10 ...
 Growth in Global Industrial Production And Merchandise
Trade
Global output and trade plummeted in the final months of 2008 (Figure 2,
view: Data Figure 2). The continuation of the financial crisis, as policies failed to
dispel uncertainty, has caused asset values to fall sharply across advanced and
emerging economies, decreasing household wealth and thereby putting
downward pressure on consumer demand. In addition, the associated high level
of uncertainty has prompted households and businesses to postpone
expenditures, reducing demand for consumer and capital goods. At the same
time, widespread disruptions in credit are constraining household spending and
curtailing production and trade.

Advanced economies are suffering their deepest recession since World War II.
Against this uncertain backdrop, output in the advanced economies is now
expected to contract by 2 percent in 2009. This would be the first annual
contraction during the postwar period, with a cumulative output loss (relative to
potential) comparable to the 1974-75 and 1980-82 periods (Figure 3, view: Data
Figure 3). Nevertheless, assuming more comprehensive and coordinated financial
policy actions that support a gradual normalization of financial market
conditions, as well as sizable fiscal stimulus and large interest rate cuts in many
advanced economies, output is expected to start recovering in late 2009 and rise
by about 1 percent in 2010. Stabilization in the U.S. housing market should help
underpin recovery during this period.
 Inflation pressures are subsiding.
Sluggish real activity and lower commodity prices have dampened inflation
pressures (Figure 5, view: Data Figure 5). In the advanced economies, headline
inflation is expected to decline from 3½ percent in 2008 to a record low ¼
percent in 2009, before edging up to ¾ percent in 2010. Moreover, some
advanced economies are expected to experience a period of very low (or even
negative) consumer price increases. In emerging and developing economies,
inflation is also expected to subside to 5¾ percent in 2009 and 5 percent in 2010,
down from 9½ percent in 2008.
 Global monetary and fiscal policies are providing substantial
support.
Faced with a quickly deteriorating outlook and subsiding inflation pressures,
central banks in the advanced economies have taken strong actions to cut policy
rates and improve credit provision. Policy interest rates have been brought down
substantially in recent months, especially as inflation pressures subsided,
although falling inflation expectations are mitigating the impact on real interest
rates. Relative to the November WEO Update projections, short-term market
interest rates in 2009 are assumed to be about ¾ percentage point lower in the
United States, the euro area, and the United Kingdom, in line with market
expectations. Central banks in emerging economies are also moving to ease their
policy stance and improve market liquidity.
To combat the downturn, many governments have announced fiscal packages to
boost their economies. Consequently, unlike the November WEO Update, the
new projections incorporate a substantial fiscal expansion. Specifically, fiscal
stimulus in G-20 countries in 2009 is projected to be 1.5 percent of GDP. Deficits
are also expected to be boosted by the operation of automatic stabilizers and the
impact on revenues of sharp asset price declines, as well as the costs of financial
sector rescues. As a result, the fiscal balance in advanced economies is projected
to deteriorate by 3¼ percentage points to -7 percent of GDP in 2009 (Figure 6,
view: Data Figure 6).
Unemployment: Troubles Ahead
for Emerging Markets

The unemployment rate in advanced economies has declined over the past
couple of years—with sharp declines in the United States and slower progress in
the euro area—and this trend is expected to continue.

In contrast, the unemployment rate in emerging economies is expected to

increase over the course of this year. Much of this increase is expected to occur in
countries where fuel exports are a big share of export earnings. As shown in Chart
2, the unemployment rate in this group is expected to increase to 8.4 percent this
year, a full percentage point above the estimate for last year.
 Population
Millions of people

All the inhabitants living in a country or a particular place is called Population.

Pakistan Population value is 204.73