The World Bank (WB) has warned that some countries' recovery will boost global growth slightly this year, but the outlook is clouded by potential pitfalls that could curb that slight increase.
The return of trade tensions, which have eased since the recent announcement of a tentative agreement between China and the United States, could undermine modest economic progress and quickly extend far beyond the two great world powers.
Most major economies are trending toward modest growth this year. This growth is almost entirely supported by a few emerging economies, which are expected to expand after a disappointing 2019. In the case of Argentina, its GDP is expected to contract at a lower rate.
The United States and China are responsible together for nearly 40% of global GDP growth and a quarter of all world trade. But by improving their relationship after two years of struggle, they will pose less of a burden on growth, even if each of these economies grows less. The eurozone, hit by a slowdown in Germany and the threat of Brexit, has "deteriorated significantly." Growth there will accelerate to 1.0% this year and then increase in 2021. Japan is also "suffering from severe weakness in manufacturing and exports," and its economy will grow by only 0.7%. Emerging markets and emerging economies have boosted the global economy during periods of weakness, but now they face a tough road, and a third of these economies will slow this year. Brazil will be supported by higher investor confidence, lower interest rates and new labor market conditions, according to the World Bank. Mexico, meanwhile, will take advantage of reduced political uncertainty, which will help boost investment. For Colombia, infrastructure projects are expected to generate 3.6% of growth. In Central America, the forecast for GDP growth is 3% thanks to improved conditions in Costa Rica and Panama. The World Bank warns that there are several risks lurking, but warns that the reduction in forecasts was before the outbreak of hostilities between the U.S. and Iran, the consequences of which cannot yet be assessed.