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January 27, 2020

Global Economy: Cagey climb

  • The World Bank forecast a moderate pick-up in global growth in 2020, even as it cut growth projections for the United States (US) and euro area (EA)
  • The US non-farm payroll jobs data disappointed in December, coming lower than market expectations
  • Japan followed other major central banks in keeping interest rates unchanged
  • China asked banks to link new loans to external benchmark in a move aimed at interest rate liberalization

The World Bank projected a moderate recovery in global growth for 2020 to 2.5%, from an estimated 2.4% in 2019, as trade and investment improve. However, it also signaled a cautious note, stating that downward risks in the form of “re-escalation of trade tensions, and sharper than expected downturns in major economies”, persist. The bank cut the US growth to 1.8% for 2020, this year, down from 2.3% estimated in 2019. The EA growth is projected to slip to 1% owing to weak industrial production. Growth in emerging markets and developing economies is forecast to accelerate to 4.1%.


Evidently, the events of a bruising 2019 weigh heavily on the growth forecasts for the year ahead.