World Bank: Global Economy to Deflate Further This Year
Global growth for 2019 will be slowing down to 2.9 percent, as predicted by the World Bank on Tuesday.
In a new report by the World Bank, Chief Executive Officer Kristalina Georgieva 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 report further notes that the global economy's growth is expected to stall to 2.9 percent this year. This number is relatively smaller than last year's 3 percent but on an international note, even a tiny drop in numbers can shake the financial realm.
Last year, the World Bank expected China to grow by 6.5 percent but this year, the hopes are down at 6.2 percent. The United States is also presumed to slow down its economic growth by 2.5 percent, compared to 2018's 2.9 predictions.
This observation comes amid the trade war between China and the U.S. Trade talks kicked off in Beijing on Monday and has been extended until Wednesday for the purpose of reaching an amicable settlement. Both parties have expressed positive expectations for the negotiations.
According to CNN, warning signs of a global economic decline will pose greater risks for developing countries, especially those that haven't kept up with the demands of becoming a developed nation.
The World Bank has included the China-U.S. trade war among others as factors that will affect the global market's performance this year. Instability within established markets and currency issues in some emerging markets were also mentioned in the report.
Even before the latest report was unveiled, the U.S. has shown a few warning signs. Among the companies affected is Apple Inc. The tech giant cut down on its quarterly forecast due to a disturbing regression of iPhone sales in China.
Furthermore, the World Bank itself is in a tight spot. On Monday, now former President Jim Yong Kim stepped down from his post. His unexpected resignation comes three years ahead of his supposed abdication of the throne. U.S. President Donald Trump has yet to appoint a new successor, who, still has to undergo the arduous transition. Analysts have suggested that the succession war won't be an easy victory for the winner.
Multiple outlets have reported that Kim will be moving on with Global Infrastructure Partners, a private equity firm based in New York. Concerns about Kim's shock move to GIP have prompted World Bank to suspend any of his potential dealings with the bank during his first 12 months with his new company.