After hearing and reading about a World Bank story in the press that brought warnings about the global economy and financial markets, I was surprised at the extent of the negativity. My assessment is more positive and so my response was basically: “What does the World Bank know? Those guys have often been well off the pace!”
Where was their warning pre-GFC? But one day on, I realise that, like many others, I’ve been a victim of what Donald Trump calls “fake news”! And I thank the Lord for the Internet and Germans for setting me straight.
I won’t name the news outlet that ran with the ominous warnings about our economic and market outlooks. Suffice to say, it focused “on the other” hand warnings that most economists will give you after holding an alternative view. Sometimes they talk about the short-term view but then compare it to the longer-term position or they can point to potential problems if policy-makers don’t take certain steps.
These scary references are often picked up by those in the media who believe they are doing some community service by scaring the pants off normal people who never test the source of their news.
Well, I’m not normal and I do test my sources, and in this case the news is excessively negative.
Over in the UK, one newspaper took the World Bank’s view and came up with: “After better than expected growth in the global economy, the World Bank says financial markets are vulnerable to unforeseen negative news.”
And there was more.
“Financial markets are complacent about the risks of sharply higher interest rates that could be triggered by better than expected growth in the global economy this year …”
So this journalist threw away the good news of “better than expected growth in the global economy this year” to focus on “unforeseen negative news”.
That’s one-eyed half-news and borders on fake news. And by the way, if I hadn’t got up this morning and gone on the Internet to test out the negativity of that story, I would never have discovered the dw.com website, which is the home of Deutsche Welle. This is the international broadcasting news unit out of Germany and here’s how they covered the story.
Compare this headline with the negative news coverage above: “World Bank upgrades growth outlook on strengthening recovery.”
And the first paragraph shows us what news used to do and it was called telling us the truth. This is how this story starring the World Bank ran: “The global lender has surprised analysts by predicting better-than-expected global growth. But the bank also warned of fading potential mainly in advanced economies due to aging populations.”
I’m not against negative news stories, so long as positive ones are given at least equal coverage.
Why do I care? Well, we have a consumer confidence problem in this country and it affects consumption, economic growth, business profitability, jobs growth and even the bottom line of the Federal Budget Deficit.
All up, there is an economic problem that does not need unnecessary negativity, which adds to related social problems.
All Australians should care about our social issues and, ironically, many of our more leftish news outlets, which talk down the economy, seem very preoccupied with how governments don’t do enough about our social issues.
Of course, apart from politicians’ short-sightedness, our leaders often lack money to help people and that’s why a strong economy needs to be encouraged not ‘bombed’ by bad journalism.
Let me share what dw.com thought its valued readers needed to see from the World Bank.
“According to the World Bank's Global Economic Prospects report released Tuesday, the global economy is expected to grow by 3.1 percent in 2018, after a better-than-expected performance in 2017 that boosted global gross domestic product (GDP) by three percent last year.
“In its twice-yearly report, the bank noted that for the first time since the global financial crisis, all major regions of the world were experiencing an uptick in economic growth.”
And the Bank itself said: "The current, broad-based growth acceleration is a welcome trend and could be self-reinforcing."
On the downside, the Bank warned that the new interest rate rising part of the economic cycle brings risks but these are well known and basically are in the hands of central banks. If they raise rates too fast, then there could be problems in late 2019 or 2020 but given the calibre of central bankers, it remains a low order risk for a few years.
Another concern was the ageing populations and its impact on productivity but this is such a broad issue, which really tests the competency skills of economists who somehow understand the link between productivity, age of workers and where technology is heading.
To me, this was a throwaway line about some of the uncertainties out there, which are many. However, the good news story is that the global economy is on the improve, so get out there and make hay while the sun shines.
Thank God the Germans believe in the value of positivity. I must say I never imagined I’d write something like that!