Economy
World Bank revises growth estimates upwardly for Hungary
Global growth has eased but remains robust and is projected to reach 3.1% in 2018. It is expected to edge down over the next two years - to 3.0% in 2019 and to 2.9% in 2020 - as global slack dissipates, trade and investment moderate, and financing conditions tighten, the World Bank’s Global Economic Prospects showed on Wednesday.
“But growth alone won’t be enough to address pockets of extreme poverty in other parts of the world. Policymakers need to focus on ways to support growth over the longer run—by boosting productivity and labor force participation—in order to accelerate progress toward ending poverty and boosting shared prosperity."
Activity in advanced economies is expected to grow 2.2% in 2018 before easing to a 2.0% rate of expansion next year, as central banks gradually remove monetary stimulus, the June 2018 Global Economic Prospects says. The estimate for 2020 is 1.7%. WB analysts raised only their 2019 forecast by 0.1 ppt.
Growth in emerging market and developing economies overall is projected to strengthen to 4.5% in 2018, before reaching 4.7% in 2019 as the recovery in commodity exporters matures and commodity prices level off following this year’s increase.
The price of oil is seen rising by 32.6% yr/yr in 2018 and drop 1.4% next year. The non-energy commodity price index is expected to rise 5.1% this year and only 0.2% in 2019.
The World Bank forecasts the U.S. economy to grow by 2.7% this year thanks to tax cuts (+0.2ppt compared to the January estimate), by 2.5% in 2019 (+0.3ppt), and by 2.0% in 2020. Projections for the Eurozone were left on hold at 2.1% for 2018, 1.7% for 2019 and 1.5% for 2020.
China’s growth is seen reaching 6.5% this year (+0.1ppt), 6.3% in 2019 and 6.2% in 2020, as export growth moderates and deleveraging takes hold. In addition, policy accommodation is expected to further diminish as authorities continue to tighten macroprudential regulation and gradually remove their supportive fiscal stance. Downside risks to the outlook stem from financial sector vulnerabilities and an intensification of trade tensions amid increased protectionism in key trading partners.
“Fiscal policies are expected to become less accommodative to contain financial risks and encourage a continued rebalancing of the economy from investment to consumption and from industry to services."
Front page photo by Brendan Smialowski/AFP
Growth in advanced economies is predicted to decelerate toward potential rates, as monetary policy normalizes and the effects of U.S. fiscal stimulus wane. In emerging market and developing economies (EMDEs), growth in commodity importers will remain robust, while the rebound in commodity exporters is projected to mature over the next two years.
Although the world economy is overall healthy, it is facing challenges, and risks to the outlook are tilted to the downside. They include disorderly financial market movements (rising interest rates in wealthier countries), escalating trade protectionism, prospects of a secular slowdown in demand for commodities, and heightened geopolitical tensions.
“If it can be sustained, the robust economic growth that we have seen this year could help lift millions out of poverty, particularly in the fast-growing economies of South Asia," commented World Bank Group President Jim Yong Kim.“But growth alone won’t be enough to address pockets of extreme poverty in other parts of the world. Policymakers need to focus on ways to support growth over the longer run—by boosting productivity and labor force participation—in order to accelerate progress toward ending poverty and boosting shared prosperity."
Activity in advanced economies is expected to grow 2.2% in 2018 before easing to a 2.0% rate of expansion next year, as central banks gradually remove monetary stimulus, the June 2018 Global Economic Prospects says. The estimate for 2020 is 1.7%. WB analysts raised only their 2019 forecast by 0.1 ppt.
Growth in emerging market and developing economies overall is projected to strengthen to 4.5% in 2018, before reaching 4.7% in 2019 as the recovery in commodity exporters matures and commodity prices level off following this year’s increase.
The price of oil is seen rising by 32.6% yr/yr in 2018 and drop 1.4% next year. The non-energy commodity price index is expected to rise 5.1% this year and only 0.2% in 2019.
The World Bank forecasts the U.S. economy to grow by 2.7% this year thanks to tax cuts (+0.2ppt compared to the January estimate), by 2.5% in 2019 (+0.3ppt), and by 2.0% in 2020. Projections for the Eurozone were left on hold at 2.1% for 2018, 1.7% for 2019 and 1.5% for 2020.
China’s growth is seen reaching 6.5% this year (+0.1ppt), 6.3% in 2019 and 6.2% in 2020, as export growth moderates and deleveraging takes hold. In addition, policy accommodation is expected to further diminish as authorities continue to tighten macroprudential regulation and gradually remove their supportive fiscal stance. Downside risks to the outlook stem from financial sector vulnerabilities and an intensification of trade tensions amid increased protectionism in key trading partners.
“Fiscal policies are expected to become less accommodative to contain financial risks and encourage a continued rebalancing of the economy from investment to consumption and from industry to services."
Front page photo by Brendan Smialowski/AFP
