The World Bank has downgraded its outlook for the global economy in 2019, forecasting that growth will be no higher than 2.9% and delivered a stark warning on the impact of the US-China trade war.
In its report on the global economy, titled ‘Global Economic Prospects – Darkening Skies’, the World Bank predicts growth will be slower than it was in 2018.
The institution has said this is due to softening manufacturing figures and increasing trade tensions.
Furthermore, growth among advanced economies is set to fall by approximately 2% in 2019 and slowing external demand, rising borrowing costs and policy uncertainty are set to also hold emerging economies back.
China’s economy is expected to grow between 6% and 6.5%, a significant drop from the estimated 6.6% growth in 2018. This is due to a deceleration in export growth and production, brought about by the trade war with the US.
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As for the US, the World Bank expects its economy to shrink to 2.5% from 2.9% growth in 2018 and in its report it has described escalating trade tensions as “major downside to the global outlook”.
“While some countries could benefit from trade diversion in the short run, rising trade protectionism would stifle investment and severely disrupt global value chains, contributing to higher prices and lower productivity,” the report says.
Speaking about the forecast, World Bank Chief Executive Officer Kristalina Georgieva, said this: “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”.
“As economic and financial headwinds intensify for emerging and developing countries, the world’s progress in reducing extreme poverty could be jeopardized. To keep the momentum, countries need to invest in people, foster inclusive growth, and build resilient societies”.
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