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World Bank: Brexit and Trump's victory effected global economic growth the most

World Bank: Brexit and Trump's victory effected global economic growth the mostBrexit and the Trump presidency are two risks that could derail a moderate pick-up in global economic growth this year, The Independent said on Wednesday.

According to a report published by the World Bank on Wednesday, the bank estimates that global growth slowed to a post-crisis low of 2.3 per cent in 2016, as trade stalled, investment decelerated, and policy uncertainty increased.

Announcing the findings of its latest Global Economic Prospects (GEP) report, the Washington-based organisation says it expects annual growth of 2.7 per cent in 2017, a moderate pick up from that 2016 figure, helped by rising commodity prices and Trump’s stimulus plans. He has pledged to pursue expansionary fiscal policies, which include tax cuts and increased infrastructure spending.

But the bank also stresses that the positive impact from Trump’s fiscal boost could be offset by his protectionist trade policies. There is a great deal of uncertainty around just what policies Trump's administration will pursue in office, it notes.

“The heightened level of policy uncertainty, especially regarding trade, has been exacerbated by recent political developments—most notably, electoral outcomes in the United States and the United Kingdom," the bank says.

“This and other risks – particularly financial market disruptions amid tighter global financing conditions – may be amplified over time by mounting protectionist tendencies, slower potential growth and elevated vulnerabilities in some emerging markets and developing countries,” it added.

Overall, however, the World Bank expects growth in advanced economies to rise to 1.8 per cent in 2017, up from the 1.6 per cent seen in 2016. For emerging and developing economies, growth is expected to accelerate to 4.2 per cent in 2017, up from 3.4 per cent seen in 2016.

“After years of disappointing global growth, we are encouraged to see stronger economic prospects on the horizon,” the bank’s president, Jim Yong Kim, said.

“Now is the time to take advantage of this momentum and increase investments in infrastructure and people. This is vital to accelerating the sustainable and inclusive economic growth required to end extreme poverty,” he added.

The International Monetary Fund will issue its economic outlook for 2017 next week.
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