According to the World Bank Group’s January 2020 edition of ‘Global Economic Prospects’, the world’s economy will grow by 2.5 per cent in 2020.
While noting that investment and trade are gradually recovering from a slowdown in global demand, the bank expects growth among advanced economies to fall to 1.4 per cent, assuming a small group of large economies improve their performance.
In contrast, emerging market and developing economies will grow by 4.1 per cent, the World Bank predicts, with a third to record contractions in growth as a result of “weaker-than-expected exports and investment”.
“With growth in emerging and developing economies likely to remain slow, policymakers should seize the opportunity to undertake structural reforms that boost broad-based growth, which is essential to poverty reduction,” World Bank Group Vice President for Equitable Growth, Finance and Institutions Ceyla Pazarbasioglu stated.
“Even if the recovery in emerging and developing economy growth takes place as expected, per capita growth would remain well below long-term averages and well below levels necessary to achieve poverty alleviation goals.”– The World Bank Group
“Steps to improve the business climate, the rule of law, debt management, and productivity can help achieve sustained growth,” he continued.
The world’s largest economy, the United States, will decelerate to 1.8 per cent, the World Bank shared, due to tariff increases and uncertainty surrounding tensions with China.
China, however, will grow by 5.9 per cent despite the trade tensions and a slowdown in global demand.
On the other hand, growth in the Euro area will slow to 1.0 per cent this year as industrial activity in the economic bloc weakens.
Downside risks — which include trade tensions and trade policy uncertainty, a sharper-than-expected downturn in major economies, and financial turmoil in emerging markets and developing economies — continue to hamper global economic growth, the World Bank said.
“Even if the recovery in emerging and developing economy growth takes place as expected, per capita growth would remain well below long-term averages and well below levels necessary to achieve poverty alleviation goals,” a release from the World Bank Group states.
In terms of regional outlook, East Asia and Pacific countries will record 5.7 per cent growth as a result of large infrastructure projects, the bank estimate. Excluding China, however, the region would grow by 4.9 per cent, with Cambodia, the Philippines, Thailand, and Vietnam the major contributors.
Adding Russia and Turkey to the Euro area, the World Bank assumes that the Europe and Central Asia region will improve to 2.6 per cent. Significantly, the Turkish economy is prospecting 3.0 per cent growth for 2020.
With oil a major commodity in the Middle East and Northern Africa corridor, the World Bank forecasts that growth will move up to 2.4 per cent.
With a 1.8 per cent growth prediction, the Latin American and Caribbean region will lag the world. Notwithstanding, the World Bank estimates improvement in the Colombian economy by 3.6 per cent and acceleration in the Central America subregion of 3.0 per cent.
The South Asian region will grow by 5.5 per cent and Sub-Saharan Africa by 2.9 per cent, the study adds.