The world bank has recently published its Global Economic Prospects report. It theorizes the possibility of the world economy, expanding by 2.5% in 2020. This figure is only slightly faster than in 2019, which showed a growth of 2.4%.
Economic growth in 2019 was the lowest since the financial crisis. The World Bank initially predicted that the global economy would grow by 2.6% in 2019 and 2.7% in 2020. However, the World Bank has, unfortunately, had to lower its forecast for 2020.
The forecast of the organization reflects an expected recovery in several emerging and developing countries, specifically – Brazil, India, Mexico, Poland, Russia, and Turkey—where the collective conditions of these countries continued to improve.
Several countries may resolve their issues and grow. For example, Brazil, which has the largest economy in South America, should be able to develop and improve its financial results relative to 2019. Argentina’s economy is likely to continue falling in 2020. Experts believe India, which has one of the largest economies in the world, will rebound after an unsteady year.
The primary considerations for the global growth forecast with the backdrop of recent developments include signs of tentative stabilization in manufacturing, weakening in the service sector, a little bit of chaos in tariffs, and geopolitical tensions.
Main Issues and challenges in world economic growth
Geopolitical tensions play a massive role in the global economy. For example, political tensions and violence may undermine Iran’s economic recovery. Unfortunately, the tension in that region, after the recent Airstrike incident, led to higher oil prices and even contributed to global recessions.
Also, as stated in the report, economic growth is directly connected to existing trade tensions. The China and U.S Trade War tensions continue, even though both countries reached an agreement back in 2019. The leaders should, however, sign the phase one trade deal.