‘Modest global growth rebound seen this year’
Credit to Author: Associated Press| Date: Thu, 09 Jan 2020 16:14:11 +0000
WASHINGTON, D.C.: The World Bank says the global economy should see a modest rebound in growth this year, but the 189-nation lending institution warns that several risks could upend its forecast, including the possibility of renewed trade hostilities between the United States and China.
In an updated economic outlook released on Wednesday, the World Bank projected the global economy to grow 2.5 percent this year, slightly up from 2.4 percent in 2019. That had been the weakest performance since the 2008 financial crisis and a significant slowdown from growth rates above 3 percent in 2017 and 2018.
The bank’s revised outlook represents a downgrade from its last forecast in June, when it had expected growth to be 0.2 percentage points higher this year. The forecast also trimmed its expectation for global growth by 0.2 percentage points over the next two years to moderate rates of 2.6 percent in 2021 and 2.7 percent in 2022.
“Downside risks persist. The recovery is fragile,” World Bank Vice President Ceyla Pazarbasioglu said. “Uncertainty has weighed on confidence, trade and investment, which are all critical for growth.”
For the United States, the World Bank sees gross domestic product growth slowing from 2.3 percent in 2019 to 1.8 percent in 2020 and to 1.7 percent in both 2021 and 2022.
Those growth rates are significantly below the 3-percent-plus growth that US President Donald Trump has promised to deliver with his economic program of tax cuts and deregulation.
For Europe, the World Bank has an even gloomier outlook. Last year’s minuscule 1.1-percent growth is expected to be followed by further scant gains of 1 percent this year and 1.3 percent in both 2021 and 2022.
China, the world’s second largest economy, is projected to post steadily slower rates of 5.9 percent this year, 5.8 percent next year and 5.7 percent in 2022. That would mark the slowest growth period for China since the early 1990s.
Economic growth in both China and the United States has been impacted by the uncertainty generated by the punitive tariffs both countries have imposed on each other’s goods.
Growth for all advanced economies is expected to slip to 1.4 percent this year, down from 1.8 percent last year, reflecting continued softness in manufacturing in many parts of the world that has caused businesses to pull back on their plans to expand and modernize production facilities.
Growth in emerging economies is expected to accelerate to 4.1 percent this year, but the acceleration will not be broad-based. A rebound is forecast for a group of larger economies — including Argentina, Brazil and India — which are expected to recover this year after a period of substantial weakness.
But the forecast expects growth in about one-third of emerging market economies to slow this year due to weaker-than-expected exports and investment.
Trump’s get-tough trade policies aimed at lowering America’s huge trade deficits as a way to boost US manufacturing jobs have resulted in an increase in protectionist barriers in the United States and many other nations.
The World Bank estimated that global trade growth slowed from 4 percent in 2018 to just 1.4 percent last year, the weakest gain since the 2008 financial crisis.
It, however, noted the lowering of trade tensions between Washington and Beijing after a so-called phase one agreement was reached between the two nations. It forecast that trade should resume growth this year, although the projected trade growth of 1.9 percent would still be far below the 5 percent average gains in recent years.
Among other threats to growth, the World Bank cited weak productivity gains in many countries and a sharp rise in global debt burdens.