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World economy slows down

The global economy has slowed over three years, says the World Bank. Of particular concern is a slowdown in global trade growth to the lowest level since the financial crisis 10 years ago. International trade and investment have been weaker than expected at the start of the year. Economic activity in major advanced economies, particularly the Euro area, and some large emerging market and developing economies has been softer than previously anticipated. Because equitable growth is essential to alleviating poverty and increasing shared prosperity, emerging market and developing economies need to reinforce the protections they have against sudden economic downdrafts. Current economic momentum remains weak, while heightened debt levels and subdued investment growth in developing economies are holding countries back from achieving their potential.

Though growth in the emerging and developing world is expected to pick up next year, a number of risks could disrupt that delicate momentum: a further escalation of trade disputes between the world’s largest economies, renewed financial turmoil in emerging and developing economies, or a more abrupt deceleration of economic growth among major economies than is currently envisioned. Countries need to make significant structural reforms that improve the business climate and attract investment. They also need to make debt management and transparency a high priority so that new debt adds to growth and investment.