Detailed Analysis of Global Economic Slowdown and its Implications

This report analyzes the global economic slowdown, highlighting the World Bank's findings that the global economy slowed to 2.9% in 2019 due to weakened trade and investment. It identifies inflation as a key macroeconomic concept and examines regional outlooks, including growth rates in East Asia...Read More

ECONOMICS

Darkening Prospects: Global Economy to slow to 2.9 percent in 2019 as Trade, Investment
Weaken
The selected article for the macroeconomic concept is darkening prospects: this will lead to
slow down the global economy slowed down to 2.9 percent during 2019 (The World Bank,
2019). In result to this, trade and investment has weakened. The aim of this press release is
awakening the developing and emerging economies should undertake to rebuild to boost the
productivity and policy buffers in order to get the sustainable growth. Main macroeconomic
concept that has identified in this press release are inflation (The World Bank, 2019).
Regional outlooks and findings are being identified. For instance- East Asia and other pacific
has emerged as one of the fastest rising areas. It is estimated that this region be expected to
grow by 6 percent in 2019. There is moderate and stable growing demand due to tightening
global financial situations (Fama, 2018). It is identified that China`s growth is expected to
grow at the slow degree of 6.2 percent where external and domestic rebalancing will continue
(The World Bank, 2019). Turkey will experience slowing growing rate with 1.6 percent
because of high inflation, low confidence, diminishing consumption, high interest rate, and
investment. Brazil is expected to increase 2.2 percent as fiscal modifications are kept in
apartment. Latin America is projected to grow until 1.7 percent being supported by private
consumption (Fama, 2018). In Mexico, due to policy uncertainties and other prospects
subdue investment where it is expected to keep growth at the rate of 2 percent (The World
Bank, 2019). Other country named “Argentina” has forecasted to contract 1.7 percent as
fiscal consolidation that will further lead to reduction in consumption, investment, and
employment. Growth in Pakistan is estimated to decelerate by 3.7 percent in 2018-2019 with
tightening financial conditions so that it can counter the increasing inflation and other
external vulnerabilities (Goolsbee, & Klenow, 2018). Sri-Lanka economy is expected to

develop and pace up with slight growth of 4 percent in 2019 that has been supported by many
infrastructure projects (Fama, 2018).
After analysing the data as per the press article is analysing of current topics. For instance- 30
percent of GDP with 70 percent of employment in developing countries are identified under
the informal sector. The article is closely related to tax revenues, equality, greater poverty,
and lower productivity (Fama, 2018). Improvement in the access to finance, reducing
taxation, burdening regulations, enhanced education, and public services enabled with
firming revenue structures will accomplish a playing field in both informal and formal sector.
It is seen that debt vulnerabilities with lower earning countries have been increasing (The
World Bank, 2019). Many countries have been suffering from the debt vulnerabilities
especially the low income countries have been rising (Fama, 2018). It is seen that borrowing
has assisted the countries in order to tackle some of the important needs whereas debt to GDP
(Gross Domestic product) ratio for the countries with low-income that has moved up.
Configuration of debt are loosened in low-income country`s economy that ultimately increase
the inflation. It leads to creation of expensive market that is based on source of financing.
Flow of money in the economy through debt financing has increased the inflation in low-
income economic countries.

References
Fama, E. F. (2018). Interest Rates and Inflation Revisited. Chicago Booth Research Paper,
(18-10).
Goolsbee, A. D., & Klenow, P. J. (2018). Internet rising, prices falling: Measuring inflation
in a world of e-commerce. In AEA Papers and Proceedings (Vol. 108, pp. 488-92).
The World Bank, (2019). Darkening Prospects: Global Economy to slow to 2.9 percent in
2019 as Trade, Investment Weaken. Retrieved from:
http://www.worldbank.org/en/news/press-release/2019/01/08/darkening-prospects-
global-economy-to-slow-to-29-percent-in-2019-as-trade-investment-weaken