The global economic growth outlook in five charts: Fragile, handle with care

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Global growth decelerated markedly last year—a post-crisis low—with key indicators, such as industrial production and trade, declining in parallel.  Growth is expected to pick up in 2020, partly reflecting continued support from monetary policy. However, the recovery will hinge on the rebound of a small number of large emerging market and developing economies (EMDEs), most of which are coming out of deep recessions or sharp slowdowns. Even so, EMDE growth will be far from sufficient to make substantial progress in poverty reduction.

1. A post-crisis low in 2019

By most measures, 2019 was the worst year for the global economy since the global financial crisis , with global growth reaching a post-crisis low of 2.4 percent.

Chart: Global Indicators in 2019
Source: CPB Netherlands Bureau for Economic Policy Analysis; Haver Analytics; World Bank.

Note: Trade measured as the average of exports and imports volumes. Manu. = manufacturing. PMI = Purchasing Managers’ Index. PMI readings above 50 indicate expansion in economic activity; readings below 50 indicate contraction. Last observation is 2019Q3 for GDP, October 2019 for industrial production and goods trade, and November 2019 for PMI.

2. A tepid pickup in 2020

Global growth is projected to edge up to 2.5 percent in 2020, with advanced economies slowing to 1.4 percent and EMDEs recovering to 4.1 percent. 

Chart: Global Growth
Source: World Bank.

Note: EMDEs = emerging market and developing economies. Shaded areas indicate forecasts. Data for 2019 are estimates. Aggregate growth rates calculated using GDP weights at 2010 prices and market exchange rates.

3. An evolving macro policy landscape

In response to subdued activity, macroeconomic policy became more stimulative last year. While monetary policy is expected to remain accommodative, fiscal support is anticipated to fade this year.

Chart: Stance of global fiscal and monetary policy
Source: Bank for International Settlements; Consensus Economics; Haver Analytics; International Monetary Fund; World Bank.

Note: Shaded areas indicate forecasts. Data for 2019 are estimates. Aggregates calculated using nominal U.S. dollar GDP weights. Fiscal impulse is the negative change in general government cyclically adjusted primary balance. Policy rates are the December to December change. Sample includes 35 AEs and 77 EMDEs for fiscal impulse and 16 AEs and 21 EMDEs for policy rates. Policy rates for 2020 use the December 2019 Consensus Forecasts report for central bank policy rates. When these are unavailable, the change in short-term yields is used.

4. A fragile rebound in EMDEs

The recovery will not be broad-based. Instead, it will mostly be driven by a pickup in a small number of large EMDEs emerging from deep recessions or sharp slowdowns.

Chart: Growth Outlook
Source: J.P. Morgan; World Bank.

Note: Green lines indicate 2000-19 simple averages. “Main drivers of pickup” includes the eight largest EMDEs that account for 90 percent of the acceleration in EMDE growth between 2019 and 2020 (Argentina, Brazil, India, Iran, Mexico, the Russian Federation, Saudi Arabia, and Turkey). Aggregate growth rates calculated using GDP weights at 2010 prices and market exchange rates. Shaded areas indicate forecasts.

5. Insufficient per capita growth to reduce poverty

Per capita growth has been insufficient to meet poverty alleviation goals in Sub-Saharan Africa—the region where most low-income countries are clustered and most of the world’s poor live. 

Chart: Productivity growth and global poverty
Source: Penn World Table; The Conference Board; World Bank.

Note: Productivity is defined as output per worker. Sample includes 29 advanced economies and 74 EMDEs. Aggregate growth rates calculated using GDP weights at 2010 prices and market exchange rates. Poverty is defined as the extreme poor living at or below $1.90 per day, in 2011 PPP terms.

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Report: Global Economic Prospects

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Authors

Carlos Arteta

Lead Economist, Development Prospects Group, World Bank

Patrick Kirby

Senior Economist, Development Prospects Group, World Bank

Join the Conversation

Jemal Kemal
January 15, 2020

Thanks

Wilbert Kanengoni
January 15, 2020

I agree with your analysis on sub Saharan Africa. It is highly probable that countries such as Zimbabwe will not register any growth due to low agricultural and industrial production as a result of low rainfall. The instability of the local currency and inability to generate adequate foreign currency have also affected production significantly leading to its reliance on imports from neighbouring countries.

Andrea Livingston-Prince
January 15, 2020

It is my hope that data capacity will increase throughout the Caribbean over the next decade. Please help