Daily Management Review

World Bank: Global economy growth is slowing down


01/10/2019


The world economy in 2019-2020 will grow more slowly than in 2018, as follows from a new forecast of the World Bank (WB). Compared to the June estimate, the forecast for 2019 has been reduced by 0.1 percentage points (pp) to 2.9%, due to a drop in activity in global trade and manufacturing, as well as due to the ongoing trade wars. The forecast for the next year is also reduced by 0.1 percentage points to 2.8% of GDP.



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In 2018, according to World Bank estimates, the growth reached 3%. Following the International Monetary Fund (IMF) and the OECD, the WB pointed out that trade tensions kept growing against the backdrop of the fact that "some large developing countries have experienced serious pressure from financial markets."

For developing countries, the growth forecast for 2019 has been lowered by 0.5 percentage points and by 0.2% - for 2020, to 4.2% and 4.5%, respectively. In particular, assessment of China’s economic growth was revised: it was reduced from 6.3% to 6.2% for 2019 (remained unchanged at 2020, at 6.2%). For developed economies, the World Bank has kept its growth forecast for this year at 2%, indicating that in 2020 it can noticeably weaken, to 1.6%. Such expectations are linked to possible slowdown of the American economy, from 2.5% growth this year to 1.7% in the next (the latest estimate was reduced immediately by 0.3 pp and is now the most pessimistic among international organizations). The forecast for 2019 has been lowered for the euro zone, too - by 0.1 pp, to 1.6% (1.5% is expected in 2020).

For countries exporting raw materials, the forecasted growth of GDP is reduced most significantly - by 0.7 pp immediately (by 2020 pp - by 2020). At that, the bank revised forecast of the average oil price for the next two years - up to $ 67 per barrel (which is $ 4 lower than its previous forecast). The bank's analysts point out that, against the backdrop of expectations of a general increase in oil demand, its reduction due to the slowdown in GDP growth in emerging economies "may have a more serious effect than expected." As the World Bank notes, the further situation also depends on the agreements reached by OPEC countries and other oil producers.

source: worldbank.org






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