World Economy Winter 2019 - Global growth remains sluggish for the time being

World output growth has slowed further in the course of 2019. However, most recently signs of stabilization appeared, especially in emerging economies where expectations seem to have started to improve. Growth is supported by more expansive monetary policies in the advanced economies and - on the back of lower US interest rates - many emerging economies. Against this backdrop, we expect the world economy to gradually gain traction going forward. Growth is projected to remain modest, however, as the US economy will continue to lose momentum in 2020 and the trend of a gradual slowdown in China will persist. World output, measured at Purchasing Power Parities, is forecast to decline to 3.0 percent in 2019, the lowest rate of growth since the Great Recession in 2009, and increase only slightly to 3.1 percent in 2020. Thus we have revised downwards our forecasts for both this year and next by 0.1 percentage point compared with our September report. For 2021 we continue to expect growth of 3.4 percent. Substantially lower growth could result in the case of a further significant deterioration of the environment for international trade leading to an additional slowdown of investment. Downward risks to the forecast rise with the degree to which the weakness in industrial production feeds through into the services sector of the economy, which has so far been relatively resilient.