World Bank cuts forecast for world economic growth in 2019

Headquarters of World Bank in Washington

Headquarters of World Bank in Washington

The bank said emerging and developing economies should rebuild policy buffers and boost productivity to sustain growth.

Growth of the world economy is expected to slow to 2.9% this year, and 2.8% in 2020, slightly below the previous forecast, and the estimates for almost all regions and countries were downgraded.

In comparison, China is expected to register a much lower growth rate of 6.3 per cent in 2018-19.

The World Bank has said it expects Russia's economy to grow by 1.5 percent this year instead of the previously forecast 1.8 percent.

In the case of the Philippines, a developing economy, the World Bank said its GDP would likely grow at 6.5 percent this year. In a report that was released on Tuesday (January 8) the World Bank said India's Gross domestic Product (GDP) will grow at 7.3 per cent during the ongoing financial year.

Georgieva will take over interim leadership of the entire World Bank Group next month after President Jim Yong Kim abruptly announced on Monday that he will resign to take a job in the private sector.

In the Global Economic Prospects published on Wednesday, titled: "Darkening Skies", Washington-based multilateral lender expects the Philippines to have grown 6.4% in 2018 from 6.7% in 2017, and expects it to hit 6.5% this year - keeping its estimates from December.

"We hope to counter global headwinds with strong domestic demand: BBB (Build, Build, Build) program, consumption (including election spending), domestic investment and FDIs (foreign direct investments) - the latter two helped by the EoDB (Ease of Doing Business) law and the reduced 11 FINL (Foreign Investment Negative List)".

The bank slashed its forecast for 2019 growth for Turkey, Argentina, Iran and Pakistan, among others. Inflation is projected to rise somewhat above the midpoint of the Reserve Bank of India's target range of 2 to 6%, mainly owing to energy and food prices, the bank said.

It said in India the recent introduction of the GST and steps toward demonetisation are expected to encourage a shift from the informal to the formal sector. Besides, it says that the economy is regaining after a temporary slowdown due to demonetisation and the implementation of GST.

"The fact is that Indian economy is being able to deliver growth slightly above its potential is a very good sign, he added". That is still a robust growth performance.

Observing that the outlook for the global economy has darkened, the report said global financing conditions have tightened, industrial production has moderated, trade tensions have intensified, and some large emerging market and developing economies have experienced significant financial market stress. "Year after year it has delivered strong numbers around its potential growth", he said.