According to The World Bank, global growth is projected to stabilize at 3.1 percent in 2018—the same pace as last year—supported by firming investment in advanced economies, a continued recovery in commodity-exporting emerging market and developing economies, and still robust growth in commodity-importing ones. However, only in a minority of countries will activity accelerate further this year, and global growth is projected to ease gradually over the next two years, to 2.9 percent in 2020. Despite the projected moderation, global growth will continue to exceed potential, suggesting that capacity constraints will become more binding and global inflation will rise.

Amid moderating international trade and tightening global financing conditions, growth in emerging market and developing economies (EMDEs) is projected to plateau, reaching 4.7 percent in 2019 and 2020, up from 4.5 percent in 2018.

Risks to the outlook

Risks include the possibility of disorderly financial market movements, escalating trade protectionism (probably driven by our American friend Donald Trump triggering retaliatory measures from affected countries), heightened policy uncertainty, and rising geopolitical tensions.

Electoral outcomes in a number of countries, including in Europe, could heighten policy uncertainty. An intensification of geopolitical tensions could also hamper growth prospects. Depleted policy buffers make many countries unprepared to the possibility of a faster-than-expected slowdown in global growth.