Home / World Economy / World Economy News / Brexit, Trade May Further Slow Global Growth, Malpass Says

Brexit, Trade May Further Slow Global Growth, Malpass Says

The global economic outlook is likely to worsen further unless policy makers resolve uncertainty about trade and Brexit, World Bank President David Malpass said.

“I think there are possibilities for improvement in the outlook into 2020,” Malpass told reporters in Washington on Wednesday. Those would include greater clarity on U.S.-China trade and Brexit, and growth-boosting policy changes in certain countries, he said.

The International Monetary Fund cited trade tensions in cutting its 2019 global growth forecast on Tuesday to 3%, the slowest pace in a decade and down from 3.2% in July. The World Bank, which produces economic projections on a different schedule, cut its 2019 forecast in June to 2.6% and projected a slow rebound to 2.7% in 2020 and to 2.8% in 2021.

“As we look at the data today, we will probably be looking at a further downgrade,” Malpass said.

That said, “there are always possibilities for good news” from talks among global finance chiefs at this week’s annual meetings of the IMF and the World Bank in Washington, he said.

The bank has underscored that heightened trade tensions between major economies and other policy uncertainty have been accompanied by slower global investment and ebbing confidence.

U.S. President Donald Trump, who nominated former Treasury official Malpass to head the World Bank this year, has been a major source of uncertainty as he slapped tariffs on Chinese imports and threatened other actions against Europe and Mexico.

Asked if clarity could also involve the U.S. and China leaving some of their trade-war tariffs in place, Malpass said, “I think it’s important that the direction be toward market liberalization.”

The World Bank would probably lower its growth projections for the U.K. and the European Union if Britain leaves the EU on Oct. 31 without a deal, Malpass said.

“There should be a focus in the outlook on what Europe does,” he said. “Brexit is a key variable.”
Source: Bloomberg

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