Global trade is expected to grow 4% in 2017, the fastest in three years.
WASHINGTON — The world economy will pick up speed this year and next, helped by steadier commodity prices and a pickup in global trade, the World Bank said.
The anti-poverty agency predicts 2.7% growth this year and 2.9% in 2018, improving on 2016’s 2.4% expansion.
The bank sees the US economy growing 2.1% this year, up from 1.6% in 2016, and the 19-country eurozone expanding 1.7%, down a notch from 1.8%. Japan is expected to grow 1.5%, fastest pace since 2013 and up from 1% last year. China’s deceleration will continue – from 6.7% growth last year to 6.5% in 2017 to 6.3% in 2018 – as the country moves away from unsustainable growth fuelled by often-wasteful investment and toward slower, steadier growth based on consumer spending.
The bank’s outlook for global growth was unchanged from a forecast it published January – a surprising bit of good news: In the sluggish aftermath of the 2007-2009 Great Recession, the bank repeatedly had to downgrade its original forecasts as hoped-for improvements never arrived.
But the environment worldwide is looking sunnier. Commodity prices are bouncing back from a freefall that began in 2014, taking down two years of growth. The bank sees oil prices rising 24∞ and non-energy commodity prices climbing 4% this year.
World trade is expected to grow 4% in 2017, the fastest in three years.
Still, the bank calls the recovery “fragile” and warns of risks from protectionism, geopolitical conflict and possibly financial fallout from expected interest-rate increases in the United States.
The world economy also faces long-term challenges, including a productivity slump that vexes economists and constrains improvements in living standards. World Bank economist Ayhan Kose, who directed the forecast, says countries should take advantage of relatively good times to enact reforms that might improve productivity, such as eliminating unnecessary regulations and promoting more competition between businesses.
“This is a good time to undertake the types of policies that will make these economies more resilient,” he says. “Fix your roof when the sun is shining.”