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Global Economic Prospects: Heightened Tensions, Subdued Investment

"Global growth in 2019 has been downgraded to 2.6 percent, 0.3 percentage point below previous forecasts"

Global growth has continued to soften in 2019. Momentum remains weak and policy space is limited. A subdued recovery in investment growth in emerging market and developing economies (EMDEs) dampens potential growth prospects and hampers progress toward achieving the ...view more

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Executive Summary: Growth is projected to gradually rise to 2.8 percent by 2021, predicated on continued benign global financing conditions, as well as a modest recovery in emerging market and developing economies (EMDEs) previously affected by financial market pressure. 

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Highlights from Chapter 1: Weak Momentum, Hightened Risks

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East Asia and Pacific: This is the first time since the 1997-1998 Asian financial crisis that growth in the region has dropped below 6%

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Europe and Central Asia: Regional growth is expected to firm to 2.7% in 2020 from a four-year low of 1.6%

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Latin America and the Caribbean: In Brazil, a weak cyclical recovery is expected to gain traction, with growth rising to 2.5% next year from 1.5% in 2019. 

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Middle East and North Africa: Regional growth is projected to rise to 3.2% in 2020, largely driven by rebound in growth among oil exporters

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South Asia: The outlook for the region is solid, with growth picking up to 7% in 2020 and 7.1% in 2021.

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Sub-Saharan Africa: Regional growth is expected to accelerate to 3.3% in 2020, assuming that robust growth in non-resource-intensive economies will be underpinned by continued strong agricultural production and sustained public investment. 

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Debt: No Free Lunch: High debt levels can limit the ability of governments to provide fiscal stimulus during downturns; and high debt can weigh on investment and long-term growth, especially at a time when investment momentum is already weak

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Investment: Subdued Prospects, Strong Needs: In light of elevated debt levels in EMDEs and lack of fiscal space, policymakers could support investment by improving the efficiency of public investment management systems

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Currency Depreciations, Inflation, and Central Bank Independence:  Policies that reinforce market competition, value chain integration, and local currency invoicing can accelerate relative price adjustments in the event of shocks 

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Growth in Low-Income Countries: Evolution, Prospects, and Policies: The 2001 low-income countries (LICs) that became Middle-income countries (MICs) had stronger policy frameworks, better governance and business environments, better-developed infrastructure, larger improvements in human capital,