Nume Ekeghe
The World Bank yesterday revised its global economic growth for 2019 downward due to ongoing trade tensions between some economies as well as its resultant effect on both advanced and emerging economies.
The Bank in a statement said international trade and manufacturing activity have softened and trade tensions remained elevated, contributing to downside risks to the three per cent outlook it projected in 2018.
It noted that some large emerging markets have experienced substantial financial market pressures as growth among advanced economies was forecast to drop to two per cent this year.
The World Bank January 2019 Global Economic Prospects noted that slowing external demand, rising borrowing costs, and persistent policy uncertainties were expected to weigh on the outlook for emerging market and developing economies.
According to World Bank Chief Executive Officer, Kristalina Georgieva, growth was anticipated to hold steady at a weaker-than-expected 4.2 percent this year.
“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 jeopardised. To keep the momentum, countries need to invest in people, foster inclusive growth, and build resilient societies,” it added.
“The upswing in commodity exporters has stagnated, while activity in commodity importers is decelerating. “Per capita growth will be insufficient to narrow the income gap with advanced economies in about 35 percent of emerging market and developing economies in 2019, with the share increasing to 60 per cent in countries affected by fragility, conflict, and violence.
“A number of developments could act as a further brake on activity. A sharper tightening in borrowing costs could depress capital inflows and lead to slower growth in many emerging market and developing economies. “Past increases in public and private debt could heighten vulnerability to swings in financing conditions and market sentiment. Intensifying trade tensions could result in weaker global growth and disrupt globally interconnected value chains,” it added.
