The World Bank (WB) has warned of a global economic slowdown in 2019 as it revised a downward projection growth of 2.9 percent this year from 3 percent in 2018.
“International trade and manufacturing activity have softened, trade tensions remain elevated, and some large emerging markets have experienced substantial financial market pressures,” said the World Bank.
WB expects growth among advanced economies to drop to 2 percent this year with a slowing external demand, rising borrowing costs, and persistent policy uncertainties that would weigh on the outlook for emerging market and developing economies. “Growth is anticipated to hold steady at a weaker-than-expected 4.2 percent this year.”
WB noted that 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 percent of emerging market and developing economies in 2019, with the share increasing to 60 percent 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,” said WB.