World growth over 3% in 2020 rests on emerging markets

Outlook

The IMF this month predicted global growth of 3.0% in 2019, rising to 3.4% next year. This seem optimistic since it is unlikely that all emerging markets (EMs) will meet expectations. EMs are expected to contribute 60% of global GDP in 2019, up from around 40% in 2000-03. By 2024 they could contribute nearly two-thirds. Although China’s growth will slow and India’s forecasts are being downgraded, both will make a record contribution to global growth in 2020-24

Latin America contributed nearly 9% of global GDP in 2000-07; from 2019 to 2024, it is expected to contribute 7.1%. The Middle East and North Africa will also contribute less.

Impacts

• China’s GDP growth is likely to slow in an orderly fashion towards 5.0-5.5% by the mid-2020s, but looser policy for longer may derail this.
• Russia and Brazil are the third- and fourth-largest EMs but face structural challenges and may struggle to grow much faster in 2020.
• Turkey is the seventh-largest EM and its finance minister expects 5% GDP growth next year, from 0.5% this year; both may prove optimistic.
• India’s growth prospects for 2020-24 have been widely downgraded and 8-9% growth now seems very optimistic, though still possible.
• ASEAN and Sub-Saharan Africa are likely to grow faster over the next four years, but weak world trade and investment could constrain this.