Washington (CNN Business)The World Bank has been warning of a worldwide economic slowdown for a while now, but its projections just took a turn for the worse.
In a 200-page report issued Tuesday, the international financial institution laid out evidence that emerging markets have been stagnating, as trade has contracted and financing conditions have worsened. The Bank knocked down its expectations for this year’s global growth to 2.9% from its previous forecast of 3%. It also lowered its 2020 growth forecast to 2.8% from 2.9%.
The World Bank blamed the downgrade on the global economy’s more-sudden-than-expected deceleration since the institution’s last forecast in June.
And the situation could deteriorate further — confirming Wall Street’s concerns about next year being a difficult one for American companies with significant business abroad.
“Downside risks have become more acute,” the Bank’s report reads. “Disorderly financial market developments could disrupt activity in the affected economies and lead to contagion effects. Trade disputes could escalate or become more widespread, denting activity in the economies involved and leading to negative global spillovers.”
The United States is still among the best performing economies in the world, but its growth streak could run out soon, as the effects of the tax cuts and government spending wear off, and the era of easy money fades further into the distance as the Federal Reserve raises interest rates. Although a recession isn’t obviously around the corner, a volatile political environment and mounting corporate debt loads are a toxic cocktail.