Jan 9, 2020 - Economy

World Bank cuts growth forecast for fourth time in a row

An employee walks outside the World Bank headquarters May 8, 2007 in Washington, DC.

Photo: Win McNamee/Getty Images

The World Bank cut its global growth forecast for the fourth straight time on Wednesday, reducing expectations by 0.2 percentage points each year for 2019, 2020 and 2021.

"Global economic growth is forecast to edge up to 2.5% in 2020 as investment and trade gradually recover from last year’s significant weakness but downward risks persist. ... U.S. growth is forecast to slow to 1.8% this year, reflecting the negative impact of earlier tariff increases and elevated uncertainty."
— World Bank statement on its Global Economic Prospects report

Zoom out: "Global growth decelerated markedly in 2019, with continued weakness in global trade and investment. ... This weakness was widespread, affecting both advanced economies — particularly the Euro Area — and emerging market and developing economies (EMDEs)," notes the report, titled Global Economic Prospects.

  • The bank also warns there's a risk of a fresh global debt crisis, with increased borrowing since 2010 leading to "the largest, fastest, and most broad-based increase in debt" among the four waves of debt buildup in the past 50 years.
"While current low levels of interest rates mitigate some of the risks associated with high debt, previous waves of broad-based debt accumulation ended with widespread financial crises. "

Why it matters: Per Axios' Dion Rabouin, this report shows the economic situation is worse than the World Bank had estimated in October, when it cut its projections for the third time.

The bottom line: Based on these projections, the global economy will likely grow slower, resulting in fewer jobs and wage increases, less new development and fewer people likely to emerge out of poverty in the future.

Read the report:

Go deeper: "A synchronized slowdown": International economic organizations lower growth forecasts


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