The World Bank (WB) said in its global economic outlook it had lowered its forecast for global economic growth by 0.1 percentage points to 2.9 percent due to a fall in trade and manufacturing, as well as due to trade wars.
The World Bank also said in its global economic outlook it had lowered its forecast for global economic growth by 0.1 percentage points to 2.9 percent due to a fall in trade and manufacturing, as well as due to trade wars.
“Global economic growth is projected to soften from a downwardly revised 3 percent in 2018 to 2.9 percent in 2019 amid rising downside risks to the outlook… International trade and manufacturing activity have softened, trade tensions remain elevated, and some large emerging markets have experienced substantial financial market pressures,” the bank said.
At the same time, the bank kept the 2019 growth forecast for developed economies and for the United States unchanged at 2 percent and 2.5 percent, respectively. The 2019 forecast for the euro area was lowered by 0.1 percentage points to 1.6 percent.
However, the bank slashed US GDP growth outlook for 2020 by 0.3 percentage points to 1.7 percent.
Chinese GDP growth forecast was lowered by 0.1 percentage points to 6.2 percent in 2019 and kept unchanged at the same 6.2 percent in 2020.
The bank maintained its December forecast for Russia’s GDP for 2019 and 2020 at 1.5 percent and 1.8 percent, respectively.
At the beginning of 2018 the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier in the year ahead, said World Bank Chief Executive Officer Kristalina Georgieva. As economic and financial headwinds intensify for emerging and developing countries, the world’s progress in reducing extreme poverty could be jeopardized. To keep the momentum, countries need to invest in people, foster inclusive growth, and build resilient societies.
The upswing in commodity exporters has stagnated, while activity in commodity importers is decelerating. Per capita growth will be insufficient to narrow the income gap with advanced economies in about 35% of emerging market and developing economies in 2019, with the share increasing to 60% in countries affected by fragility, conflict, and violence.
A number of developments could act as a further brake on activity. A sharper tightening in borrowing costs could depress capital inflows and lead to slower growth in many emerging market and developing economies. Past increases in public and private debt could heighten vulnerability to swings in financing conditions and market sentiment. Intensifying trade tensions could result in weaker global growth and disrupt globally interconnected value chains.
Robust economic growth is essential to reducing poverty and boosting shared prosperity, said World Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu. As the outlook for the global economy has darkened, strengthening contingency planning, facilitating trade, and improving access to finance will be crucial to navigate current uncertainties and invigorate growth.