World Bank trims 2020 growth forecast, cites slow recovery in trade/investment

Anil Panchal FXStreet

In its latest prediction of the global growth forecast, the World Bank cites a slower recovery of trade/investment to mark a 0.20% reduction in 2019 and 2020 growth expectations.

Key quotes

In its latest Global Economic Prospects report, the World Bank shaved 0.2 percentage point off of growth for both years, with the 2019 global economic growth forecast at 2.4% and 2020 at 2.5%.

This modest increase in global growth marks the end of the slowdown that started in 2018 and took a heavy toll on global activity, trade and investment, especially last year.

We do expect an improvement, but overall, we also see a weaker growth outlook.

Global trade growth is expected to improve modestly in 2020 to 1.9% from 1.4% in 2019, which was the lowest since the 2008-2009 financial crisis.

Growth in the United States, the euro area and Japan is expected to decline slightly to 1.4% in 2020 from 1.6% in 2019.

Emerging market economies are expected to see a pickup in growth to 4.3% in 2020 from 4.1% in 2019.

Prospects are expected to improve for six countries that struggled with slowdowns in 2019: Brazil, India, Mexico, Russia, Saudi Arabia and Turkey.

FX implications

With the likely slower recovery in trade/investments, the market’s performance could be hindered amid times of geopolitical risk emanating from Iran. As a result, the AUD/USD and USD/JPY, currently near 0.6870 and 109.10 respectively, could fail to hold on to their recovery gains.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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