Each year, the World Bank conducts an extensive survey of developed and emerging market countries in order to better determine where global growth might be heading. In its most recent study released in January, the World Bank identified various factors that led to less growth estimates across global economies.
The World Bank identified softened international commerce and continued trade tensions as key concerns in revising its growth estimates. Another factor, weakening demand for commodities such as metals and construction materials, is representative of slowing global expansion. Concurrently, the Chinese government released data in January revealing that it had its lowest GDP growth in 30 years.
Demographics continue to drive population rates higher in low income and emerging economies such as India, where the average age is much younger than in developed countries such as Germany or the U.S. Particularly affecting emerging markets is the heightened cost of debt, with central banks around the world curtailing accommodative policies and raising borrowing costs.
For developed economies, growth is estimated to remain consistent for the U.S. yet weaker than expected in Europe. Estimates for 2019 U.S. GDP growth are 2.5%, falling to 1.6% in 2021. Estimates for India and China over the next three years are expected to rise, with China expected to produce a 6% growth rate and India 7.5% in 2021.
China and India are expected to eventually surpass the United States in total GDP with current growth estimates, nudging the U.S. from the largest economy globally to the third largest. Some believe that as China and India grow, so will American energy exports such as oil and natural gas to countries in their expansion stages.
Source: World Bank; Global Economic Prospects Darkening Skies Jan 2019