Global economic growth is forecast to edge up to 2.5percent in 2020 as investment and trade gradually recover from last year’s significant weakness but downward risks persist, the World Bank says in its January 2020 Global Economic Prospects.
As to the press release, growth among advanced economies as a group is anticipated to slip to 1.4 percent in 2020 in part due to continued softness in manufacturing. Growth in emerging market and developing economies is expected to accelerate this year to 4.1 percent.
This rebound is not broad-based; instead, it assumes improved performance of a small group of large economies, some of which are emerging from a period of substantial weakness. About a third of emerging market and developing economies are projected to decelerate this year due to weaker-than-expected exports and investment.
“With growth in emerging and developing economies likely to remain slow, policymakers should seize the opportunity to undertake structural reforms that boost broad-based growth, which is essential to poverty reduction,” said World Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu. “Steps to improve the business climate, the rule of law, debt management, and productivity can help achieve sustained growth.”
U.S. growth is forecast to slow to 1.8 percent this year, reflecting the negative impact of earlier tariff increases and elevated uncertainty. Euro Area growth is projected to slip to a downwardly revised 1percent in 2020 amid weak industrial activity.
Downside risks to the global outlook predominate, and their materialization could slow growth substantially. These risks include a re-escalation of trade tensions and trade policy uncertainty, a sharper-than expected downturn in major economies, and financial turmoil in emerging market and developing economies. Even if the recovery in emerging and developing economy growth takes place as expected, per capita growth would remain well below long-term averages and well below levels necessary to achieve poverty alleviation goals.
“Low global interest rates provide only a precarious protection against financial crises,” said World Bank Prospects Group Director Ayhan Kose, “The history of past waves of debt accumulation shows that these waves tend to have unhappy endings. In a fragile global environment, policy improvements are critical to minimize the risks associated with the current debt wave.”
Regional growth of Sub-Saharan Africa is expected to pick up to 2.9 percent in 2020, assuming investor confidence improves in some large economies, energy bottlenecks
The African Guarantee Fund is focused on its goal to provide financial guarantees for over 10,000 small and medium enterprises annually through partner financial institutions and as a trickledown effect, create 30,000 jobs per year.
“We are excited about the
confidence our shareholders and partners have in what we are doing in Africa.
This capital injection will go a long way in ensuring that we continue to make
a positive impact in the continent. So far, we have cumulatively issued more
than 1 billion USD worth of guarantees making available about 1.7 billion USD
for small and medium enterprise financing through our Partner Financial
Institutions. This has led to the creation of more than 100,000 additional
jobs,” says Felix Bikpo,
ease, a pickup in oil production
contributes to recovery in oil exporters and robust growth continues among
agricultural commodity exporters.
The forecast is weaker than previously expected reflecting softer demand from key trading partners, lower commodity prices, and adverse domestic developments in several countries. In South Africa, growth is expected to pick up to 0.9 percent, assuming the new administration’s reform agenda gathers pace, policy uncertainty wanes, and investment gradually recovers.
Growth in Nigeria expected to edge up to 2.1 percent as the macroeconomic framework is not conducive to confidence. Growth in Angola is anticipated to accelerate to 1.5 percent, assuming that ongoing reforms provide greater macroeconomic stability, improve the business environment, and bolster private investment.
In the West African Economic and Monetary Union, growth is expected to hold steady at 6.4 percent. In Kenya, growth is seen edging up to 6 percent.
The Ethiopian Herald Sunday Edition 12 January 2020
BY MEHARI BEYENE
