The World Bank has kept its economic growth forecast for the United States unchanged, though it downgraded the outlook for the global economy amid trade conflicts and rising government debts.
In the report “Global Economic Prospects: Heightened Tensions, Subdued Investment” released on June 4, the World Bank forecast the United States economy will expand at 2.5 percent in 2019, equal to its January projections.
China, the second largest economy after the United States, will also see a growth rate unchanged at 6.2 percent this year, the worst performance since 1990, after the country endured a terrible crackdown on pro-democracy protesters at Tiananmen Square.
However, the global lender downgraded other advanced regions of the world, with the eurozone slowing to 1.2 percent from 1.6 percent in the previous forecast, and Japan to 0.8 percent from 0.9 percent.
The expansion of emerging markets and developing economies is also expected to slow to 4.0 percent from 4.3 percent.
Globally, World Bank downgraded the world economy to 2.6 percent this year from the 2.9 percent expansion forecast in January. The slow down reflects weaker-than-expected trade and investment at the start of the year.
“Global policy uncertainty is close to record highs, reflecting increased risks of further escalation in trade tensions and rising political uncertainty,” World Bank writes in its latest report.
The Trump administration has imposed tariffs on hundreds of billions of dollars on China imports, accusing Beijing of unfair trade practices.
With the current trade tensions between the United States and China, global trade is expected to grow at only 2.6 percent this year, the weakest since the 2008 financial crisis.
“Global growth has continued to weaken and momentum remains fragile,” World Bank said, adding that downside risks to growth predominate, including a buildup of government debt and deeper-than-expected slowdowns in several major economies, in addition to rising trade barriers.
For next two years, World Bank projected the global growth will gradually rise to 2.7 percent in 2020 and 2.8 percent in 2021, based on continued benign global financing conditions and a modest recovery in emerging market and developing economies.