The World Bank has released its Global Economic Prospects January 2020 report, forecasting global economic growth to edge up to 2.5 per cent this year as investment and trade gradually recover from last year’s significant weakness while emphasizing that downward risks persist.

Growth among advanced economies as a group is anticipated to slip to 1.4 per cent in 2020 while growth in emerging market and developing economies is expected to accelerate to 4.1 per cent.

Growth in the East Asia and Pacific region is projected to ease to 5.7 per cent, reflecting a further moderate slowdown in China to 5.9 per cent. These developments reflect continued domestic and external headwinds, including the lingering impact of trade tensions, despite the phase one agreement between China and the US. This outlook is predicated on no renewed escalation of trade tensions between the two and a gradual stabilization in global trade. It also assumes that authorities in China continue to implement monetary and fiscal policies to offset the negative impact of weakening exports.

Regional growth excluding China is projected to recover slightly to 4.9 per cent, as domestic demand benefits from generally supportive financial conditions amid low inflation and robust capital flows in some countries, including Cambodia, the Philippines, Thailand, and Vietnam, and as large public infrastructure projects come onstream in the Philippines and Thailand.

Regional growth will also benefit from the reduced global trade policy uncertainty and a moderate, if still subdued, recovery of global trade. Growth in Malaysia is expected to inch down to 4.5 per cent, with weak export growth partly offset by strong domestic demand, underpinned by favorable financing conditions, a rise in investment, stable labor market conditions, and low inflation.

The report noted that the balance of risks to the outlook has improved but is still tilted to the downside. Downside risks include a sharp slowdown in global trade due to a re-escalation of trade tensions, a sharper-than-expected slowdown in major economies, and a sudden reversal of capital flows due to an abrupt deterioration in financing conditions, investor sentiment, or geopolitical relations. An upside risk to the forecast is that the recent trade agreement between China and the US could lead to a sustained reduction in trade uncertainty, resulting in a stronger-than-expected recovery of regional investment and trade.

“Even though most large countries have generally sound economic fundamentals - track records of solid growth, fast labor productivity growth, large consumer bases, diversified economies, sound policy frameworks, and strong policy buffers - the region remains vulnerable to risks related to abrupt changes in global financial conditions,” the report stated.


The World Bank also released the October 2019 edition of its East Asia and Pacific Economic Update on October 11, entitled “Weathering Growth Risks”, forecasting Vietnam’s GDP in 2020 and 2021 at 6.5 per cent. Growth in developing East Asian and Pacific economies is expected to slow from 6.3 per cent in 2018 to 5.8 per cent in 2019 and to 5.7 and 5.6 per cent in 2020 and 2021, respectively, reflecting a broad-based decline in export growth and manufacturing activity.