By Tom Burnett, CFA
On January 8, 2020, the World Bank issued its latest report on global GDP growth estimates. The latest report updates the estimates from the Bank’s June 2019 report. The January report lowers global GDP growth estimates for 2019, 2020, and 2021 from the earlier June estimates. In each case, the latest estimate is 0.2% lower than the projection in the June report. For example, the global GDP growth rate for 2020 is now targeted at 2.5%, down from 2.7% in the June report.
For the U.S., the January report gives a 2019 GDP growth figure of 2.3%, down from 2.5% in the earlier June report. The latest report lowers expected 2020 and 2021 GDP growth rates to 1.8% and 1.7% respectively. The EU economy is now expected to grow at just 1.0% in 2020 and 1.3% in 2021. The 2021 estimate is down sharply from the 1.7% forecast issued in the June report. Uncertainties arising from the continuing Brexit turmoil are expected to exert pressure on the EU growth rates for the next two years.
For the first time in many years, the China GDP growth rate is expected to come in below 6.0% in both 2020 and 2021, as lingering pressures from the tariff/trade dispute with the U. S. continue to inhibit investment and consumption. The forecasts for China’s GDP growth in 2020 and 2021 are 5.9% and 5.8% respectively. Both of those two estimates are 0.2% lower than the forecasts issued in the June report. Importantly, overall world trade volumes are only expected to increase by 1.9% in 2020. In the June report, the Bank estimated that overall volumes would grow by 3.2%. The current estimate is much lower reflecting the negative impact of the U.S.-China trade dispute.
Tom Burnett, CFA is Director of Research