‘Darkening Skies’ ahead for global economy says World Bank

January  9, 2019 | Investopaper

The World Bank on Tuesday issued a warning that the global economy will be further harmed by the trade conflict between the US and China. The title of this year’s report ‘Darkening Skies’ summarized the coming days for global economy.

The bank said in its semi-annual report that the economy as a whole is beginning to slow down and the poorer countries are likely to be hit most by the rise in government and corporate debt. Similarly, hike in interest rates will increase the borrowing cost.

“The global economy is going through a difficult period. Skies are darkening and we see the global economy slowing.”- the bank said.

The world economic growth is expected to slow down to 2.9% this year followed by 2.8 percent for the next year. US economy which has been affected by trade war and trump tax cut policy is expected to fall to 2.5% in 2019 and 1.7 percent in 2020. The slowing Chinese economy is also expected to slip down to 6.2% for the next two years.

The Bank has calculated that 2.5% of global trade is affected by the new tariffs and trade taxes that were inflicted last year. It would have worsened by double value if further tariffs were implemented by the US and China.

The head of the World Bank’s Development Prospects Group, Mr. Kose advised the government to prepare for difficult days ahead and look for a resolution. He further stated that global growth is still robust but whether a storm will hit or it will clear highly depends on how policymakers are going to react.


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