Global Economic Prospects – Darkening Skies

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Achieving the Sustainable Development Goals, the World Bank’s twin goals—or any other development goal for that matter—hinges on sustained economic growth in emerging market and developing economies (EMDEs). This growth in turn depends on macroeconomic stability. The semi-annual Global Economic Prospects (GEP) report assesses the global outlook for growth and stability in these countries. The January 2019 edition, Darkening Skies, highlights how precarious the current economic juncture is. In a nutshell, growth has weakened, trade tensions remain high, several developing economies have experienced financial stress, and risks to the outlook have increased. As the report points out, EMDEs face some of the greatest risks. If a trade war between the United States and China contributes to a global slowdown, the spillover effects on EMDEs could be profound. Similarly, a sharp increase in global interest rates would severely affect highly indebted EMDEs, as Turkey and Argentina painfully discovered last summer.