The World Bank cut its forecast for global economic growth in 2019. A slowdown due to the trade war, and global trade activity itself has reached its lowest level since the financial crisis.
The bank’s initial forecast was for growth of 2.9% this year, made in January. The revision is for growth of 2.6%, and last year the forecast was even for growth of 3%. According to the bank, however, the pace will pick up as global growth is expected at 2.7% next year.
Business confidence is collapsing, world trade slows down, investment in developed and emerging economies is weak. Economic development remains fairly fragile. The bank also warned of worsening risks in the next US-China escalation, stronger financial turbulence in emerging markets, and a slowdown in economic growth than expected, especially in Europe.
For Europe, the World Bank has reduced its eurozone growth forecast to 1.2% in 2019, 1.4% in 2020, respectively, by 0.4% and 0.1% of the January forecast. Low exports and weak investment are the main factors that have a negative impact on the development of the European economy.
The Bank leaves its forecast for the US and China unchanged this year. The US economy is expected to shrink to 2.5% growth this year and further contraction to 1.7% in 2020 and 1.6% in 2021, with the underlying cause being already weakened fiscal stimulus.
The bank expects the Chinese economy to expand to 6.2% this year before it slows down to 6.1% in 2020.
Source: Bloomberg Finance L.P.
Graphs: Used with permission of Bloomberg Finance L.P.
Trader Martin Nikolov