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 having improved their relationship after two years of fighting, they will pose less of a strain 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 in that area will accelerate to 1.0% this year and then pick up in 2021. Japan is also "suffering from serious weaknesses in production and exports" and its economy will grow by just 0.7%. Emerging markets and developing economies have boosted the global economy during periods of weakness, but now face a tough road ahead and a third of these economies will slow this year. Brazil will be supported by improved investor confidence, lower interest rates and new labor market conditions, according to the World Bank. Mexico, meanwhile, will benefit from reduced political uncertainty, which will help boost investment. For Colombia, infrastructure projects are expected to generate growth of 3.6%. In Central America, GDP growth is forecast at 3% thanks to improving conditions in Costa Rica and Panama. The World Bank warns that there are several risks lurking, but cautions that the reduction in forecasts was before the outbreak of hostilities between US and Iranian states, the effects of which cannot yet be assessed.
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