World Bank warns of global economic slowdown risks in 2019
The World Bank revealed on Wednesday that the global economy is expected to slow to 2.9% in 2019 compared with 3% in 2018 as advanced economy central banks continue withdrawing policy accommodation even as trade disputes risk escalation.
In its Global Economic Prospects report for January, the multilateral lender said: "At the beginning of 2018 the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier in the year ahead."
The World Bank highlighted how growth in emerging market and developing economies was expected to remain flat in 2019, with the recovery in growth in countries reliant on commodity exports expected to be "much slower" and that it would decelerate in many other economies.
"In addition, risks are growing that growth could be even weaker than anticipated," it said.
Especially worrying was the increase seen in government debt-to-GDP levels in low-income countries from 30% to 50% over just the past four years.
"Under these circumstances, were financing conditions to tighten abruptly, countries could experience sudden capital outflows and struggle to refinance debts," the World Bank explained.
It also highlighted the growing threats posed by world hunger and food insecurity.
"Policies introduced in 2010-2011 may have accounted for 40 percent of the increase of the world price of wheat and one-quarter of the price rise for maize.
"[...] Further, food price spikes of the kind experienced in 2010-11 could occur again as extreme weather events raise the possibility of disruption to food production."
The bank's economists also warned that a 'no-deal' Brexit would impact negatively on economies as far away as Moldova, Belarus and Ukraine in the east to Turkey, Egypt and Morocco, as the shockwaves sweep across Europe and then, via trade links, across the southern edge of the Mediterranean.
Franziska Ohnsorge, the report's author, said: "Brexit without a deal is a risk to the UK and to Europe and any region that trades heavily with them. It means that countries in eastern Europe like Moldova and as far away as Georgia and those in North Africa will be affected."