World Bank expects global economy to slow to 2.9% in 2019

Growth among advanced economies is forecast to drop to 2 per cent this year, according to the January 2019 Global Economic Prospects released by the World Bank.

“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 report said.

“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,” said World Bank chief executive officer Kristalina Georgieva. “As economic and financial headwinds intensify for emerging and developing countries, the world’s progress in reducing extreme poverty could be jeopardised. To keep the momentum, countries need to invest in people, foster inclusive growth, and build resilient societies.”

“Robust economic growth is essential to reducing poverty and boosting shared prosperity,” said World Bank group vice president for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu. “As the outlook for the global economy has darkened, strengthening contingency planning, facilitating trade, and improving access to finance will be crucial to navigate current uncertainties and invigorate growth.”

“Designing tax and social policies to level the playing field for formal and informal sectors as well as strengthening domestic revenue mobilisation and debt management will be important priorities for policymakers to overcome the challenges associated with informality in developing economies,” said World Bank prospects group director Ayhan Kose. “As the economic outlook dims, such efforts become even more important.”

In terms of regional outlooks, East Asia and Pacific remains one of the world’s fastest-growing developing regions. Regional growth is expected to moderate to 6 per cent in 2019, assuming broadly stable commodity prices, a moderation in global demand and trade, and a gradual tightening of global financial conditions. Growth in China is expected to slow to 6.2 per cent this year as domestic and external rebalancing continue. The rest of the region is expected to grow at 5.2 per cent in 2019 as resilient demand offsets the negative impact of slowing exports. Indonesia’s growth is expected to hold steady at 5.2 per cent. The expansion of the Thai economy is expected to slow in 2019 to 3.8 per cent.

Regional growth in South Asia is expected to accelerate to 7.1 per cent in 2019, underpinned by strengthening investment and robust consumption. India is forecast to accelerate to 7.3 per cent in FY 2018-19 as consumption remains robust and investment growth continues. Bangladesh is expected to slow to 7 per cent in FY2018-19 as activity is supported by strong private consumption and infrastructure spending. Pakistan’s growth is projected to decelerate to 3.7 per cent in FY2018-19, with financial conditions tightening to help counter rising inflation and external vulnerabilities. Sri Lanka is anticipated to speed up slightly to 4 per cent in 2019, supported by robust domestic demand and investment boosted by infrastructure projects.

In Europe and Central Asia, the lingering effects of financial stress in Turkey are anticipated to weigh on regional growth this year, slowing it to 2.3 per cent in 2019. Turkey is forecast to experience weak activity and slow to a 1.6 per cent pace due to high inflation, high interest rates, and low confidence, dampening consumption and investment. (RKS)

Fibre2Fashion News Desk – India