The World Bank raised its forecast for global economic growth for 2018. However, experts warned that demographic factors, lack of investment, a slowdown in productivity growth and tightening monetary policy are limiting further economic recovery.
The recovery of manufacturing, investment and trade will contribute to a global economy growth of 3.1% this year, according to a World Bank Global Economic Outlook survey. In June, the bank forecast growth of 2.9% in 2018.
The Bank also increased its estimate of global GDP growth in 2017 from 2.7% to 3%.
The growth forecast for 2019 has been revised from 2.9% to 3%.
In 2020, the global economy is expected to grow by 2.9%.
The problem facing the world is that after several years of recovery from the financial crisis of 2008, most developed and developing countries closed the gap between actual and potential economic growth.
The World Bank has warned that accelerating global economic growth will be temporary if governments do not undertake structural reforms to increase long-term growth potential.
The growth of developed economies is expected to slow in the coming years as they approach full employment, and central banks raise rates to keep inflation in check. According to the bank, growth in developed countries will slow down from 2.3% last year to 2.2% this year and to 1.7% by 2020.
The Eurozone GDP growth estimate for 2017 was increased by 0.7 percentage points (pp) to 2.4%. The forecast for 2018 is increased by 0.6 pp to 2.1%.
In 2019, growth in the eurozone is expected to slow to 1.7%, and in 2020 to 1.5%.
According to the results of 2017, the estimate of US GDP growth was increased from 2.1% to 2.3%.
The growth forecast for 2018 has been revised from 2.2% to 2.5%. According to World Bank estimates, in 2019, US economic growth will slow to 2.2%, and in 2020 to 2%.
Japan's GDP in 2017 increased by 1.7%, rather than 1.5%, as expected in June, the bank said.
The forecast for 2018 has been revised from 1% to 1.3%, for 2019 – from 0.6% to 0.8%. In 2020, growth is projected to slow to 0.5%.
Emerging economies, which grew 4.3% last year, may also face growth restrictions in the long run.
India's GDP last year increased by 6.7% instead of the expected 7.2% in June.
The forecast for 2018 was reduced by 0.2 percentage points to 7.3%, for 2019 – also by 0.2 percentage points to 7.5%.
In 2020, India’s GDP growth rate is expected to remain at 7.5%.
China's GDP growth in 2017 is now estimated at 6.8%, 0.3 pp above the June estimate.
The forecast for this year is increased by 0.1 percentage points to 6.4%.
The World Bank expects Russia's GDP to grow by 1.7% in 2017 and 2018: forecast increased by 0.4 pp and 0.3 pp respectively.
Brazil's exit from the recession was faster than the World Bank had expected. The growth estimate in 2017 was increased by 0.7 pp to 1%. The forecast for 2018 is increased by 0.2 pp to 2%.
In many large emerging economies that have fueled global expansion for several years, potential growth has declined significantly over the past decade.
This trend is likely to continue over the next 10 years, the bank warned.
Bank economists have noted long-term demographic changes.
In countries like China, the labor force decreases as the population ages. This coincided with a slowdown in productivity growth.
In addition to concerns about the long-term growth of the global economy, the World Bank has pointed out risks in the short term.
Among these risks are a sudden increase in the low cost of borrowing as a result of a faster-than-expected increase in the rates of the US Federal Reserve and other central banks or because of increased concerns about growing capital markets.
Protectionism and the resulting slowdown in global trade growth are also among the risks.
According to the World Bank, the volume of world trade in goods and services last year increased by 4.3% and was an important factor in the growth of the global economy.