Reflecting the slower-than-expected recovery of trade, the World Bank has lowered its forecast for this year’s global economic growth pace by 0.2 percentage point, South Korea’s Ministry of Economy and Finance said Thursday.
In its biannual Global Economic Prospects report issued in Washington, the World Bank predicted that the world economy will expand 2.5 percent in 2020, down from its earlier outlook in June 2019.
This annual growth rate is anticipated to rise gradually to 2.6 percent in 2021 and 2.7 percent in 2022, the report said.
As key reason for the downward adjustment, the international financial institution cited slower-than-expected recovery in trade and investments, despite some thawing signs in the US-China trade tensions.
After last year, which marked the weakest economic expansion since the financial crisis a decade ago, 2020 will see some improvements, but the global economy still continues to remain vulnerable to uncertainties, according to the report.
“This modest increase in global growth marks the end of the slowdown that started in 2018 and took a heavy toll on global activity, trade and investment, especially last year,” Ayhan Kose, the World Bank’s lead economic forecaster, was quoted as saying.
Unlike the International Monetary Fund and Organization for Economic Cooperation and Development that use the purchasing power parity exchange rates, the World Bank bases its forecasts on actual market exchange rates.
The PPP exchange rate refers to the conversion that tries to equalize the purchasing power of different currencies by eliminating different price levels between countries.
When converted to PPP standards, the latest World Bank forecast would translate into a 3.2 percent growth. The corresponding figure suggested by the IMF and OECD were respectively 3.4 percent as of October 2019 and 2.9 percent as of November 2019.
While offering no individual country forecasts, the report predicted that emerging economies will struggle more than developed ones this year amid contracted investments and trade.
The growth rate for emerging markets is expected to linger around 4.1 percent this year, down 0.5 percentage point on-year.
Reflecting various regional factors -- the prolonged slow growth of China, the US-China trade friction, and the Korea-Japan tensions -- the East Asia and Pacific region will see its growth pace fall 0.1 percentage point to 5.7 percent this year, according to the report.
By Bae Hyun-jung (email@example.com