World Bank predicts fragile global recovery

Business | 9 Jan 2020 11:36 am

The World Bank says the global economy should rebound modestly this year.

But the 189-nation lending institution is cautioning that a number risks could upend its forecast, including the possibility of renewed trade hostilities between the world’s two biggest economies, the United States and China.

In an updated economic outlook released Wednesday, the World Bank forecast the global economy will grow by 2.5 percent this year, up only slightly from 2.4 percent growth 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 percnt in 2022.

“Downside risks persist. The recovery is fragile,” said World Bank Vice President Ceyla Pazarbasioglu. “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 then slowing further to 1.7 percent in both 2021 and 2022.

Those growth rates are significantly below the 3 percent-plus growth 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.

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.-AP


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