Trade tensions, geopolitical uncertainty and costly natural disasters are taking a beating on 2019 GDP projections.
UNITED NATIONS – Global economic growth continues to weaken amid “unresolved trade tensions and elevated international policy uncertainty,” according to a new U.N. forecast released on Tuesday.
Dawn Holland is the chief of the U.N.’s Global Economic Monitoring Branch.
“If we look back six months ago, we saw that growth had already started to slow, but some of the risks that were highlighted at that time have now materialized.”
Those risks include an ongoing U.S.-China trade spat, the perpetually delayed Brexit process and the risk of geopolitical crises in Iran, Libya and Venezuela.
“Taking all of this together, we’ve downgraded our forecast for GDP growth for this year at the global level to two percent, compared to a projection of three percent that we made last January.”
Projections of U.S. economic growth for 2019 were also revised downward to 2.3% from a previous 2.9%. An early 2020 U.S. GDP projection currently stands even lower, at 2.1%.
And while Holland says a positive resolution of trade negotiations with China could unlock higher-than-expected growth, she thinks there are more “downside risks” to the global economy not likely to go away, including one long-ignored by economists: natural disasters fueled by climate change.
One such disaster, Cyclone Idai, slammed into Mozambique in March as “one of the worst weather-related disasters ever in the Southern Hemisphere” and is erecting public health, food and reconstruction challenges for a country already struggling under the weight of a debt crisis.
“The increased frequency and intensity of natural disasters and the increased economic costs that these disasters are having are now forcing us as economists to internalize that into our forecasting work. As an economist assessing our profession’s past work on this, I think we’ve grossly overlooked the dangers and the threats that these cause.”