The World Bank says given latest development across the world, global economic growth could see a weaker-than-expected 2.6% in 2019, before inching up to 2.7% by 2020, even as emerging markets and developing economies are expected to stabilize next year.
This represents a drop from the 3.0% initially predicted for the year, earlier forecast in its World Economic Situation and Prospect for 2019 and next year, although it noted the steady pace of expansion in the global economy that masks an increase in downside risks and could potentially exacerbate development challenges in many parts of the world.
At that time, the bank said in a statement on Tuesday, June 4, 2019, some countries would have moved past periods of financial strain, but economic momentum remains weak.
According to the World Bank’s its “June 2019 Global Economic Prospects: Heightened Tensions, Subdued Investment,” structural problems that misallocate or discourage investment would also weigh on the outlook.
Emerging, developing economies’ growth is seen picking up to 4.6% in 2020 from 4% in 2019; expansion vulnerable to trade, financial disruptions, which the report further predicts, would be constrained by sluggish investment, and risks, including rising trade barriers, and renewed financial stress, are tilted to the downside.
Another factor driving the slower growth, it noted, is sharper-than-expected slowdowns in several major economies.
“Stronger economic growth is essential to reducing poverty and improving living standards,” said World Bank Group President David Malpass.
“Current economic momentum remains weak, while heightened debt levels and subdued investment growth in developing economies are holding countries back from achieving their potential. It’s urgent that countries make significant structural reforms that improve the business climate and attract investment. They also need to make debt management and transparency a high priority so that new debt adds to growth and investment.”