Tuesday, January 8, 2019

The World Bank sees "stormy skies" for the global economy during 2019 - News


The global economy will slow down during 2019 and the recovery in trade and manufacturing activity are losing ground. Hours after Monday afternoon, the sudden resignation of World Bank President Jim Yong Kim, three years ago, and before the end of his term, the organization presented a report on this noon in London this afternoon. Soon little optimistic about the prospects for the new year and also in the coming years. The trend of global GDP growth is downward in relation to 2017 and 2018 data.

The title of the work that every January presents the World Bank is significant enough: 'Darkening skies' [Cels de tempesta]. Thus, the forecast for the year just begun is a fall of the total economic growth of one tenth. Of the 3% that was considered in the last prediction, and that already had been revised downwards, it is passed to the current 2.9 and still to a lower 2.8 for the period 2020-21, according to with the just published data.

Regarding the most advanced countries, however, the figures are more worrying, as the growth will not exceed 2%. Regarding emerging markets and developing economies, the slowdown in demand, the rise in the price of money and other factors of instability can also act as wheeled poles. Examples of the difficulties faced by this group of countries are the ones that have suffered in recent months, economies such as Argentina and Turkey.


Tremors in the euro zone


Possible increase in public deficit in France and Italy

Regarding the eurozone in a specific way, the slowdown in growth has been even more pronounced than expected for 2018. According to the data still estimates, it has not exceeded 1.9%, 0.2 points below what had been considered before. The slowdown will continue this year with a drop of three decimals (1.6%) and still two more (1.4%) for the end of the period 2020-21. Among other reasons, the progressive suppression of the monetary stimuli hitherto dispensed by the European Central Bank to the countries of the euro and the decline in demand in imported countries of manufactured goods - the most exemplary case is China - are some of the causes


The report does not dedicate a single specific phrase to the Spanish economy, but it does emphasize, however, as a potential destabilization factor for the euro zone the possibility of increasing public deficits in France and Italy "in the middle of pressures of the public opinion to make additional expenses and to alleviate the tax burden ". Nor does he speak specifically about Brexit, but it is felt that it is another of the elements of uncertainty that are currently outlined on the horizon of 2019.


The data on German industrial production known on Tuesday are not optimistic either. In November, they fell by a third consecutive loss. Forecasts that point to a positive increase of 0.3% have vanished, after the federal statistics office counted the fall of 1.9% month-on-month. Annually, until last November, industrial production has fallen by an alarming 4.7%.







Another of the global risk factors outlined by the World Bank is that, despite the sustained economic growth of the United States, it will continue to be supported by fiscal incentives, which will facilitate the deepening of the fiscal deficit. According to these forecasts, at the end of the 2020-2020 horizon, advanced economies would not exceed, overall, a growth of 1.5%.

The global decline predicted by the World Bank can be further enhanced by the persistence of "commercial tensions." The commercial war started by the United States and the aforementioned decline in consumption in China - a factor that has had a direct impact on the results of a carrier company such as Apple - could add darkness to the stormy sky warned by the entity based in Washington.


In fact, the negative perspectives of technology giants are not limited to Apple alone. South Korea expects to drop 29% in operating profit in the last quarter of 2018, a projection that marks the first fall in quarterly profits in two years. In a statement released this Tuesday, the company mentions the weakening of demand and increased competition - in this case, Chinese rivals - as a fundamental cause of the decline in profits.


On the other hand, the report highlights the enormous weight of the economy undergone within the global volume of GDP - it calculates in a third -; an economy that occupies 70% of workers in the countries of emerging economies and developing markets.


One of the most direct consequences of pessimistic economic forecasts for 2019 is the persistence of global inequalities. A third of the world population, more than 2,000 million people, will continue to live with $ 3.5 or less per day.


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