This came as the recovery in investment, manufacturing, and trade continues, and as commodity-exporting developing economies benefit from firming commodity prices.
Growth in advanced economies is expected to moderate slightly to 2.2% in 2018, as central banks gradually remove their post-crisis accommodation and as an upturn in investment levels off. Growth in emerging market and developing economies as a whole is projected to strengthen to 4.5% in 2018, as activity in commodity exporters continues to recover.
“The broad-based recovery in global growth is encouraging, but this is no time for complacency. This is a great opportunity to invest in human and physical capital. If policy makers around the world focus on these key investments, they can increase their countries’ productivity, boost workforce participation, and move closer to the goals of ending extreme poverty and boosting shared prosperity”, said WB Group President Jim Yong Kim.
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The slowdown in potential growth is the result of years of softening productivity growth, weak investment, and the aging of the global labor force. The deceleration is widespread, affecting economies that account for more than 65% of global GDP.
The WB pointed out that without efforts to revitalize potential growth, the decline may extend into the next decade, and could slow average global growth by a quarter percentage point and average growth in emerging market and developing economies by half a percentage point over that period.
Risks to the outlook remain tilted to the downside. An abrupt tightening of global financing conditions could derail the expansion. Escalating trade restrictions and rising geopolitical tensions could dampen confidence and activity. On the other hand, stronger-than-anticipated growth could also materialize in several large economies, further extending the global upturn.
According to the Bank, growth in the East Asia and Pacific region is forecast to slip to 6.2% in 2018 from an estimated 6.4% in 2017. Notably, a structural slowdown in China is seen offsetting a modest cyclical pickup in the rest of the region, forecast to moderate to 6.4% in 2018, and 6.3% in 2019.
Growth for the US economy is expected to reach 2.5% in 2018, 2.2% and 2.0% in the next two years, while EURO zone to enjoy 2.1%, and 1.3% for Japan in the Northeast Asia region.
Besides, 3.0% and 2.9% are respectively forecast for global economic growth in 2019 and 2020./.