2019 Global Economic Outlook: World Bank Report

The World Bank released its 2019 Global Economy Outlook in January this year. In this post I try to highlight the key facts and information from their press released and patially from the report as well.

Global Summary

  • International trade and manufacturing activity have slowed down.
  • Intensifying trade tensions could result in even weaker global growth and disrupt global interconnected value chains.
  • Borrowing costs for emerging and developing economies have increased.
  • Uprising in commodity exporters has stagnated and activity in commodity importers is decelerating.
    • Energy prices have fluctuated, mainly due to supply factors.
    • Other commodity prices have also weakened – particularly metals – posing further challenges to commodity exporters.
  • Past increases in public and private debt could heighten vulnerability to swings in financing conditions.
    • Debt vulnerability (debt-to-GDP ratio) is rising in low-income countries.
  • Maintaining low global inflation may become a challenge as long-term factors that helped reduce inflation in past decades may lose momentum.
East Asia and Pacific remains one of the world’s fastest developing regions. Regional growth expected at 6% in 2019.
  • China 6.2%
  • Indonesia 5.2%
  • Thailand 3.8%
Europe and Central Asia. Financial stress in Turkey is weightening down regional growth, expected at 2.3% in 2019.
  • Turkey 1.6% (due to high inflation, high interest rates and low market confidence)
  • Poland 4%
Latin America and Caribbean. Regional growth is expected at 1.7% in 2019.
  • Brasil 2.2% (assuming fiscal reform is quickly put in place).
  • Mexico 2%
  • Argentina -1.7% (as deep fiscal consolidation leads to loss of employment and reduced consumption and investment)
Middle East and North Africa. Regional growth expected to rise to 1.9% in 2019. Domestic factors such as policy reforms are promoting growth in the region. Oil exporters expected to pick up slightly and GCC countries expected to grow 2.6%.
  • Iran -3.6% (due to sanctions)
  • Algeria 2.3%
  • Egypt 5.6% (as investments is supported by reforms and consumption picks up)
South Asia. Regional growth expected to accelerate tp 7.1% in 2019, by strenghtening investment and robust consumption.
  • India 7.3%
  • Pakistan 3.7%
  • Sri Lanka 4%
  • Nepal 5.9%
Sub-Saharan Africa. Regional growth expected to accelerate to 3.4% due to diminished policy uncertainty.
  • Nigeria 2.2% (assuming that oil production will recover)
  • Angola 2.9% (assuming that oil sector recovers)
  • South Africa 1.3% due to constraints on domestic demand and unlimited government spending.

The United States remains stable due to fiscal stimulus and better than expected domestic deman, with GDP growth projected at 2.9% in 2019. Growth in the European Union, on the other hand, is weaker than expected at 1.6%, due to slowing exports and as monetary stimulus is withdrawn.

Source: World Bank Press Release

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