The global economy significantly weakened in 2019 to 2.3 percent growth in GDP, down from 3.0 percent in 2018. However, a small recovery in 2020 to 2.5 percent growth is likely, according to The Conference Board Global Economic Outlook 2020. In the longer-term, the global economy will grow at about 2.7 percent by the middle of the next decade. Consumers around the world will benefit from rising wages and low inflation rates, while businesses continue to leverage innovation and digital transformation to grow top-line revenue and reduce costs to avoid a major squeeze on profits.
In addition to forecasts for 2020, The Conference Board Global Economic Outlook 2020 provides projections for the output growth of the world economy, including 11 major regions and individual estimates for 33 mature and 36 emerging market economies for 2020 – 2024 and 2025 – 29.
The critical component of the recovery in 2020 is the eventual bottoming out of the decline in industrial production. The slump, which originated in China in 2018, rapidly spread across the world in 2019 and upset global supply chains, pushing some economies (such as those in Germany and Japan) to the brink of recession. Emerging markets in particular will benefit from an industrial recovery, rising commodity and energy prices, and stable currencies.
“The global economy has taken a bigger hit in 2019 than anticipated and it seems we have arrived in a world of stagnating growth,” says Bart van Ark, Chief Economist of The Conference Board. “But even though recession fears are widespread, we expect some recovery in 2020 as China’s overcapacity problem is being addressed, supply chains are getting restructured, the risk of an escalation of trade disputes recedes, and productivity growth continues to recover.”
While output may still contract temporarily in some locations (for example, in Germany, Italy, Japan, or the UK) as well as in some emerging markets (such as Brazil, Mexico, and Turkey), robust labor markets and strong consumer spending will continue to provide an im-portant contribution to growth for most countries. The current unusually large gap between the high level of consumer confidence and rapidly declining business confidence is likely to get resolved in favor of improving business confidence.
For more information on The Conference Board Global Economic Outlook, visit the website: www.conference-board.org