Growth rates in low-income countries are expected to rise to 6 per cent in 2020 from 5.4 per cent this year, but that is still not enough to substantially reduce poverty, according to the World Bank (WB).
A number of low-income countries progressed to middle-income status between 2000 and 2018, the remaining low-income countries face steeper challenges to achieving similar progress, the WB said in a report released on Tuesday.
Many are poorer than the countries that made the leap to higher income levels and are fragile, disadvantaged by geography and heavily reliant on agriculture, said the report titled ‘June 2019 Global Economic Prospects: Heightened Tensions, Subdued Investment.’
“Stronger economic growth is essential to reducing poverty and improving living standards,” said World Bank Group President David Malpass.
“Current economic momentum remains weak, while heightened debt levels and subdued investment growth in developing economies are holding countries back from achieving their potential,” he said, adding it is urgent that countries make significant structural reforms that improve the business climate and attract investment.
“They also need to make debt management and transparency a high priority so that new debt adds to growth and investment,” said Malpass.
While almost every economy faces headwinds, the poorest countries face the most daunting challenges because of fragility, geographic isolation, and entrenched poverty, said World Bank Group Vice President for Equitable Growth, Finance, and Institutions, Ceyla Pazarbasioglu.
“Unless they can get onto a faster growth trajectory, the goal of lowering extreme poverty under 3 per cent by 2030 will remain unreachable,” he said.
On the other hand, said the World Bank report, growth in emerging market and developing economies is expected to stabilise next year as some countries move past periods of financial strain, However, the economic momentum remains weak.
“Emerging and developing economy growth is constrained by sluggish investment, and risks are tilted to the downside. These risks include rising trade barriers, renewed financial stress, and sharper-than-expected slowdowns in several major economies,” it said.
Growth among emerging market and developing economies is projected to fall to a four-year low of 4 per cent in 2019 before recovering to 4.6 per cent in 2020. A number of economies are coping with the impact of financial stress and political uncertainty.
Those drags are anticipated to wane and global trade growth — which is projected to be the weakest in 2019 since the financial crisis a decade ago — is expected to recover somewhat, said the report.