World GDP growth fell and is expected to remain stuck for the next two years.
World GDP growth fell to 2.9% this year – its lowest rate since the financial crisis – and is expected to remain stuck at 3% over the next two years, and while global trade continues dragging down economic activity in almost all major economies, the OECD has slashed its global growth forecast down from its May 2019 estimate of 3.2% and from 3.5% growth in 2018.
This would be the lowest level of economic expansion since the end of the financial crisis, and possibly the trough of the current slowdown, although the OECD expects economic growth to remain subdued through 2020 and 2021.
OECD Chief Economist Laurence Boost said:
“It would be a mistake to consider these changes as temporary factors that can be addressed with monetary or fiscal policy: they are structural. Without coordination for trade and global taxation, clear policy directions for the energy transition, uncertainty will continue to loom large and damage growth prospects.”
The current slowdown involves both advanced and emerging economies, as nine of the world’s ten largest economies are expected to see weaker growth this year than they did in 2018.
What is happening?
There are many factors that have uncertainty reigning in global economies.
Growth in imports and exports, which collapsed during the financial crisis, are once again weakening sharply, trade disputes are creating uncertainty for businesses, policies are unstable, and investment is not steady.
The following Statista chart shows the latest growth projections for the world’s largest economies, as well as the previous forecast dating back to May 2019: