For the first time in many years, the World Bank's outlook for the global economy is better than expected rather than worse, with growth improving for all regions, according to the latest forecasts released Tuesday.
However, the bank warns that countries must make investments to improve their growth prospects, and the time to do so is before the next economic crisis hits, as it will inevitably do.
"The big story is a good story: global growth is stronger than expected," the World Bank economist Ayhan Kose told AFP, noting that all forecasts are better than those of the World Bank. The June issue of the Global Economic Prospects report.
Kose, who heads the World Bank's Development Prospects Group – which prepares world economic forecasts twice a year – notes that the world is experiencing "highly synchronized" economic expansion between regions.
This includes strong growth in the "big three" advanced economies – the United States, the euro area, and Japan – and improvements in the important emerging market economies.
In addition, major commodity exporting economies such as Russia and Brazil – struggling and seeing their economies shrink in 2016 – recovered last year.
Since the last forecast in June, the World Bank has re-evaluated almost all of its forecasts, with global economic growth now expected to reach 3.0% in 2017, three tenths more than the previous estimate. Growth is expected to reach 3.1% this year and 3.0% in 2019.
The largest gains are in the advanced economies, which were revised up four tenths in 2017 and 2018 to 2.3% and 2.2%, respectively.
But for 2019 and 2020, these economies are slowing to 1.9% and 1.7%, according to the report.
Growth in the euro area was revised up 0.7 points to 2.4% in 2017 and 0.6 points to 2.1% in 2018.
The United States experienced a slight improvement to 2.3% last year and 2.2% this year, while Japan rebounded to 1.7% in 2017 and 1.3% this year. year. The report raised its forecast for China in 2017 by three-tenths. Central bank efforts to keep interest rates low have helped stabilize the global economy and fueled the recovery, said Kose in an interview.
However, "the downside risks continue to dominate the outlook," he warned.
He warned that "history will repeat itself", and like all occasions, "this expansion will end at some point."
Risks include rising debt levels, which are more worrisome given that central banks are beginning to raise interest rates and could do so more quickly if the recovery starts to pick up. ignite inflation, Kose said.
Another risk is "escalating trade restrictions".
While Kose did not specifically name the United States, President Donald Trump took a very aggressive stance on trade policy.