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World Bank: Global economy to grow 3.1% in 2018; slower growth in next 2 years

Global economic growth will ease gradually over the next two years, as the recovery in major commodity-exporting emerging market and developing economies levels off and advanced-economy growth slows, the World Bank said June 5 in its Global Economic Prospects report.

The bank expects the global economy to remain strong at 3.1% in 2018 but will slow to 3% in 2019 and to 2.9% in 2020.

The report projected activity in advanced economies to rise by 2.2% in 2018 before easing to a 2% rate of expansion in 2019 as central banks end their monetary stimulus measures, the 2018 report released in June said.

Growth in emerging market and developing economies is projected to reach 4.5% in 2018 and 4.7% in 2019 as commodity markets stabilize.

The U.S. is projected to grow 2.7% in 2018 then slow to 2.5% in 2019 and 2% in 2020. Growth in the eurozone is projected at 2.1% in 2018, slip to 1.7% in 2019 and 1.5% in 2020. China is expected to grow at 6.5% in 2018, 6.3% in 2019 and 6.2% in 2020.

The bank said that considerable downside risks have affected this trend.

"The possibility of disorderly financial market volatility has increased, and the vulnerability of some emerging market and developing economies to such disruption has risen. Trade protectionist sentiment has also mounted, while policy uncertainty and geopolitical risks remain elevated," said the report.

Other risks to the global economy are higher interest rates and weaker demand for commodities in developing nations, said the bank.

"Policymakers in emerging market and developing economies need to be prepared to cope with possible bouts of financial market volatility as advanced-economy monetary policy normalization gets into high gear," World Bank Development Economics Prospects director Ayhan Kose said.

World Bank Group President Jim Yong Kim urged policymakers to focus on ways to boost productivity and labor force participation to support growth over the longer term.