Slow growth and wave of debt mark global economic outlook

This is stated in the World Bank's World Economic Outlook report : Slow Growth, Policy Challenges.

Its projections indicate that growth in emerging market and developing economies will accelerate from 3,5% last year to 4,1%. For advanced economies as a whole there would be a decline of 1,6% to 1,4%, mainly due to persistent weakness in manufacturing.

The World Bank expresses concern about some aspects of this slow growth, indicating that even if emerging and developing economies recover as expected, per capita growth will remain well below long-term averages and will advance at a slow pace. too slow to achieve poverty eradication goals.

The threats of growth

For the World Bank, one aspect that darkens the outlook is the fact that the last 50 years have seen the largest, fastest and most widespread wave of debt accumulation among emerging and developing economies.

It reveals that total debt among these economies rose from 115% of gross domestic product (GDP) in 2010 to around 170% of GDP in 2018. Debt levels have also increased in low-income countries after the sharp decline recorded between 2000 and 2010.

Although he highlights that public debt can be beneficial and boost economic development when used to finance development-promoting investments, for example, in infrastructure, health care and education, he warns that the three waves of debt accumulation Previous ones ended badly: sovereign debt defaults in the early 1990s; financial crises in the late 2000s; the need for significant debt relief in the 2008s, and the global financial crisis in 09-XNUMX.

Per capita growth will remain well below long-term averages and move too slowly to achieve poverty eradication goals.

Latin America and the Caribbean

In 2020, regional growth is expected to increase to 1,8% as growth in larger economies consolidates and domestic demand rises across the region.

In Brazil, it is expected that the increase in confidence among investors and the gradual relaxation of financing and labor market conditions will serve as the basis for growth to accelerate to 2%.

In Mexico, growth will increase to 1,2% as reduced regulatory uncertainty will help investment rebound, while Argentina is expected to contract at a slower pace of 1,3%. In Colombia, progress in infrastructure projects will support an increase in growth, expected at 3,6%.

Likewise, growth in Central America is expected to consolidate at 3% thanks to the easing of credit conditions in Costa Rica and relief after problems in construction projects in Panama.

In the Caribbean, growth will accelerate to 5,6%, mainly due to offshore oil production in Guyana.