Since 2016, they have enjoyed a recovery led by rising industrial metals prices, although this partially stalled in 2019. Other LICs have been able to maintain robust growth in a slowing global environment thanks to a combination of robust construction activity, urbanization, and expanding services sectors. For 2019-21, growth is forecast at 5.8 percent, somewhat higher than during the past three years (5.3 percent over 2016-18; Figure 3; World Bank 2019a). This forecast, however, represents a downgrade from earlier vintages, in part reflecting unexpectedly weak external demand from major trading partners, extreme weather events that dampened activity in several countries, and an earlier-than-expected normalization of agricultural production in some large LICs after strong recoveries from drought in previous years.

LICs experiencing fragility, conflict, and violence have not seen any improvement in per capita incomes in 2016-18, which undermines efforts to reduce poverty (Figure 3). Southern and East Africa were hit by two devastating tropical cyclones—Idai and Kenneth—in March and April 2019 that took a heavy human toll and caused severe damage to social and economic infrastructure in these economies.

# 2.3 Longer-term growth prospects in EMDEs

Over the longer term, challenges relating to demographics, productivity growth, and investment point to weakening long-term growth in EMDEs (Figure 4; Diao, McMillan, and Rodrik 2019; McMillan, Rodick, and Sepúlveda 2016; World Bank 2018a). Thus, potential output growth is expected to decline to 4.3 percent a year on average in 2019-27, well below the 5.9 percent a year during 2003-07. 60 percent of EMDEs are expected to experience a slowdown.

The slowdown is being driven by a combination of factors. Productivity growth has moderated as the growth of productivity-enhancing investment has slowed, pre-crisis gains in factor reallocation (notably including the migration of labor from agriculture to manufacturing and services activities) have been largely depleted, and growth in global value chains has moderated. Slower investment growth, partly driven by policy-guided rebalancing in China, has also tempered capital accumulation. Since 2010, the share of the working-age population has stabilized in the average EMDEs after more than four decades of rapid increases. Many of these factors will continue to constrain potential output growth in the period ahead. To counteract them, policymakers should undertake ambitious, credible reform agendas that boost human and physical capital accumulation and improve productivity. Sustained robust per capita income growth is needed for EMDEs to meaningfully reduce poverty (World Bank 2018b).<sup>5</sup>

# 2.4 Slowing convergence with advanced economies

During 2000-08, per capita growth in EMDEs averaged 4.7 percent a year, up from 1 percent a year in the 1990s. Since the 2009 global recession, however, per capita growth has slowed, and is expected to reach 3.2 percent in 2019-21. However, there have been substantial differences across countries (Figure 2).

> 5 See also Dollar, Kleineberg and Kraay (2013); Dollar and Kraay (2002); Foster and Székely (2008); Ravallion and Chen (1997); Santos, Dabus, and Delbianco (2019); and World Bank (2018c).