World Bank sees modest global ’20

WASHINGTON, Jan 14, (AP): The World Bank says the global economy should see a modest rebound in growth this year.

But the 189-nation lending institution is cautioning that a number risks could upend its forecast, including the possibility of renewed trade hostilities between the world’s two biggest economies, the United States and China.

In an updated economic outlook released Wednesday, the World Bank forecast the global economy will grow 2.5% this year, up only slightly from 2.4% growth in 2019. That had been the weakest performance since the 2008 financial crisis and a significant slowdown from growth rates above 3% in 2017 and 2018.

The bank’s revised outlook represents a downgrade from its last forecast in June when it had expected growth to be 0.2 percentage-points higher this year. The forecast also trimmed its expectation for global growth by 0.2 percentage points over the next two years to moderate rates of 2.6% in 2021 and 2.7% in 2022.

“Downside risks persist. The recovery is fragile,” said World Bank Vice President Ceyla Pazarbasioglu. “Uncertainty has weighed on confidence, trade and investment which are all critical for growth.”

For the United States, the World Bank sees gross domestic product growth slowing from 2.3% in 2019 to 1.8% in 2020 and then slowing further to 1.7% in both 2021 and 2022.

Those growth rates are significantly below the 3%plus growth President Donald Trump has promised to deliver with his economic program of tax cuts and deregulation.

For Europe, the World Bank has an even gloomier outlook. Last year’s minuscule 1.1% growth is expected to be followed by further scant gains of 1% this year and 1.3% in both 2021 and 2022.

The new forecast projects China, the world’s second largest economy, will grow at steadily slower rates of 5.9% this year, 5.8% next year and 5.7% in 2022. That would mark the slowest growth period for China since the early 1990s.

Economic growth in both China and the United States has been impacted by the uncertainty generated by the punitive tariffs both countries have imposed on each other’s goods.