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Global economic growth downgraded to 2.6% in 2019 — World Bank

Pictured: Shenzhen, China (Image courtesy of Shutterstock)

Global economic growth is forecast to ease to a weaker-than-expected 2.6% in 2019 before inching up to 2.7% in 2020, the World Bank says in its June 2019 Global Economic Prospects: Heightened Tensions, Subdued Investment.  

Global growth in 2019 has been downgraded 0.3 percentage point below previous forecasts, reflecting weaker-than-expected international trade and investment at the start of the year, the World Bank says.  

Growth in emerging markets and developing economies is expected to stabilize next year as some countries move past periods of financial strain, but economic momentum remains weak, the report maintains. 

It’s urgent that countries make significant structural reforms that improve the business climate and attract investment —  World Bank Group President

Emerging and developing economy growth is constrained by sluggish investment, and risks are tilted to the downside. These risks include rising trade barriers, renewed financial stress, and sharper-than-expected slowdowns in several major economies, the World Bank reports. Structural problems that misallocate or discourage investment also weigh on the outlook. 

In particular, global trade growth in 2019 has been revised down a full percentage point, to 2.6 percent—slightly below the pace observed during the 2015-16 trade slowdown and the weakest since the global financial crisis.   

“Stronger economic growth is essential to reducing poverty and improving living standards,” World Bank Group President David Malpass said in a media statement.

“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,” Malpass added.

Read the full report here.