The growth of the global economy is expected to slow to 2.9 percent in 2019 compared with 3 percent in 2018, the World Bank said on Tuesday, citing elevated trade tensions and international trade moderation.
“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,” World Bank chief executive officer Kristalina Georgieva said in the semi-annual Global Economic Prospects report.
In a 200-page report issued Tuesday, the international financial institution laid out evidence that emerging markets have been stagnating, as trade has contracted and financing conditions have worsened.
And the situation could deteriorate further — confirming Wall Street’s concerns about next year being a difficult one for American companies with significant business abroad.
“Downside risks have become more acute,” the Bank’s report reads.
“Disorderly financial market developments could disrupt activity in the affected economies and lead to contagion effects. Trade disputes could escalate or become more widespread, denting activity in the economies involved and leading to negative global spillovers.”
The World Bank outlook comes as the United States and China have been engaged in a bitter trade dispute, which has jolted financial markets across the world for months. The two economies have imposed tit-for-tat duties on each other’s goods, although there were signs of progress on Tuesday as the two countries prepared to enter the third day of talks in Beijing.
The United States is still among the best performing economies in the world, but its growth streak could run out soon, as the effects of the tax cuts and government spending wear off, and the era of easy money fades further into the distance as the Federal Reserve raises interest rates.
Emerging market economies are expected to grow at 4.2 percent this year, with advanced economies expected to grow at 2 percent, the World Bank said in the report.
The World Bank is going through its own difficult transition, with President Jim Yong Kim unexpectedly resigning on Monday, three years ahead of schedule. President Donald Trump will now need to appoint a successor since the United States is the bank’s largest shareholder.