World Bank predicts 2.9% slow global economic growth in 2019

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World Bank

The World Bank has forecast that global economic growth is projected to soften from a downwardly revised three per cent in 2018 to 2.9 per cent in 2019 amid rising downside risks to the outlook; urging that emerging and developing economies should rebuild policy buffers and boost productivity to sustain growth.

The bank, in its January 2019 Global Economic Prospects release on Tuesday, said that international trade and manufacturing activity have softened, trade tensions remain elevated, and some large emerging markets have experienced substantial financial market pressures.

World Bank Chief Executive Officer, Kristalina Georgieva, observed that 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.

Growth among advanced economies is forecast to drop to 2 percent this year, the January 2019 Global Economic Prospects stated.

Slowing external demand, rising borrowing costs, and persistent policy uncertainties are expected to weigh on the outlook for emerging market and developing economies. Growth for this group is anticipated to hold steady at a weaker-than-expected 4.2 per cent this year.

The World Bank CEO, advised that 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 World Bank Chief said.

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,” the report stated.

It further warned that intensifying trade tensions could result in weaker global growth and disrupt globally interconnected value chains.

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