A recent Reuters poll expresses caution about a recovery in global economic growth this year, despite the optimism surrounding the US-China phase one trade deal. In 2019, global economic growth had weakened to the slowest pace seen since the financial crisis over escalating trade tensions and political uncertainties.
In response, several central banks worldwide had eased their monetary policies, a practice that is likely to continue into this year as well. Over 75% of economists surveyed anticipate economic growth to remain around the same levels as in 2019. The growth outlook for almost 75% of 46 leading economies around the world remains unchanged or slightly lower than forecast in the previous poll. In addition, inflation estimates for nearly 85% of the economies have also been either kept unchanged or have been revised lower.
According to economists, although trade tensions have receded somewhat, there are still several external risks that could weigh on economic growth, including political uncertainties. While manufacturing and trade are expected to pick up in 2020 after slowing down since late 2018, the rebound would be slight and not enough to boost a revival.
The US-China phase one trade deal signing has helped eliminate some downside risks and improved the market sentiment, but is limited in scope and may not be enough to turn things around for the global economy. Recently, the World Economic Forum also revised its global growth projections for 2019, 2020 and 2021 lower. The WEF now expects global growth for 2019 at 2.9% to pick up to 3.3% in 2020 and 3.4% in 2021, 0.1% lower for 2019 and 2020 and 0.2% lower for 2021.