Global Economic Prospects 2019
Published: June 5, 2019
The Global Economic Prospects 2019 released by the World Bank makes the following observations:
- Global real GDP growth forecast has been reduced to 2.6% for 2019. The estimate was down by 0.3%age points from its previous forecast in January.
- There could be a marginal increase to 2.7% in 2020.
- Global economy continues to soften and momentum remains weak and investment remains sluggish.
- The downside risks to global growth include rising trade barriers, a build-up of government debt and slowdowns that were deeper than expected in several major economies.
- The sluggishness of investment in EMDEs (Emerging Markets Developing Economies) is part of a protracted slowdown following the global financial crisis barring the 2016-2018 recovery.
- Weak global growth, limited potential for public investment due to elevated debt levels and the presence of structural constraints are expected to dampen investment growth.
- Advanced economies are expected to slow down in 2019, particularly the Euro Area due to weaker investments and exports.
- The growth of the US is expected to slow to 2.5% this year, down from an estimated 2.9% in 2018, and further down to 1.7% and 1.6% in 2020 and 2021 respectively.
- In spite of monetary policy support continuing, softness in trade and domestic demand is expected to put Euro Area growth at 1.4% in 2020-21.
- South Asia s growth remained robust in spite of global economic headwinds and weakening trade and manufacturing.
- The impact of U.S.-China trade tensions is grim. While some countries may benefit from trade diversion in the short run adverse effects from weakening growth and rising policy uncertainties involving the world s two largest economies would have predominantly negative repercussions.
- The policy uncertainty in the US is expected to significantly erode growth and investment across EMDEs, as protectionist measures impact a wide range of downstream industries and trading partners due to the existence of global value chains.
- A no-deal Brexit could have a severe impact on the U.K. and to a lower extent on its European trading partners in the event of disruptions and delays at the border.
Projections about India
- India s growth forecasts are projected to be 7.5% per annum in 2019, 2020 and 2021.
- Both private and in public infrastructure has offset a slowdown in government consumption.
- Soft agricultural prices dampened rural consumption whereas urban consumption was bolstered by credit growth.
- Robust growth was broad-based with the industrial sector accelerating on the back of manufacturing and construction whereas agriculture and services sectors moderating due to because of subdued harvest and slowing trade, hotel, communications and transport sector, respectively.
- Continuing weakness in corporate and financial sector balance sheets remain a constraint for growth despite recent improvements in the Ease of Doing Business in India
The Global Economic Prospects 2019 of June has been titled Heightened Tensions, Subdued Investment .
Category: Economy & Banking Current Affairs