World Bank sees global growth slowing in 2019

Lloyd Doyle
January 10, 2019

"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", said the official.

Growth will probably increase to 1.7% in 2020 and 1.8% in 2021, it says.

THE WORLD BANK expects the Philippines to sustain above-average economic growth in the next two years despite a global slowdown triggered largely by the trade spat between the world's two biggest economies.

"As economic and financial headwinds intensify for emerging and developing countries, the world's progress in reducing extreme poverty could be jeopardised".

It also noted that the 2018 growth outlook for commodity importers in the East Asia and Pacific, excluding China, "has been downgraded because of a moderation in private consumption amid rising inflation in the Philippines".

The World Bank cut its forecast for the global economy as slowing growth in trade and investment and rising interest rates sapped momentum, especially in emerging markets.

China's growth rate was estimated to be 6.5 per cent last year and forecast to be 6.2 per cent this year and the next, and going down further to 6 per cent in 2021.

At the center of the turmoil, United States economic growth is expected to slow this year by four tenths of a point, falling to 2.5% down from 2.9% in 2018, and to slow even further next year to 1.7%.

The World Bank's forecast compares with the Asian Development Bank's 6.4% and 6.7% estimates for 2018 and 2019, respectively, the International Monetary Fund's (IMF) 6.5% and 6.7%, and 6.7% of the Organization for Economic Cooperation and Development for both years.

Though the bank still sees a low probability of recession in the United States, even a small slowdown has an outsize effect. Other countries retaliated with tariffs of their own in disputes that have yet to be resolved.

Worldwide trade and manufacturing activity have softened, trade tensions remain elevated, and some large emerging markets have experienced substantial financial market pressures, it said.

"How they resolve their differences is going to be very important how global economy is going to shape this year", said Kose. "Our hope is that these differences are going to be resolved".

Looking at the data, "you definitely see that in 2018 manufacturing has slowed; (and) export orders have slowed". The World Bank reasons that this is a result of increased consumption and investment.

"The sense of urgency has to be there", Kose said.

"Downside risks have become more acute".

"Philippines is fairly resilient to external shocks given its strong macroeconomic fundamentals such as having a flexible exchange rate regime, large foreign reserve, low external debt and large inflow of remittances", she said in an e-mailed response to queries.

Other reports by Iphone Fresh

Discuss This Article