6.2 percent in 2012 to a trough of 5 percent in 2016. In 2017, many EMDEs saw a mild cyclical recovery, led by growth in exports and investment as global manufacturing and trade picked up, but EMDE growth has since weakened again.

Weakening global economic growth has coincided with country-specific challenges in some large EMDEs. In China, for example, with the unwinding of policy stimulus, efforts have also been also made to guide the economy away from investment- and export-driven growth toward more balanced growth that relies more on consumer spending. The resultant slowdown in China, from growth of 8.9 percent on average during the previous global expansions to 6.6 percent in 2018, has weighed on growth in its trading partners and in commodity exporters (World Bank 2016; Huidrom et al. 2019). In some other major EMDEs, episodes of policy uncertainty, social tensions, geopolitical events, and civil wars have caused sharp losses in confidence.

Repeated short-term growth disappointments. The latest global recovery has also seen repeated downgrades in short-term global growth forecasts (Figure 12). Over 2010-19, on average, current-year growth projections in consensus forecasts have been downgraded from a year earlier in around 52 percent of countries. Downgrades affected growth forecasts for both advanced economies (49 percent of countries) and EMDEs (54 percent of countries), but with forecasts for EMDEs revised down by a wider margin. For EMDEs, since 2009, growth has been revised down by an average of 0.2 percentage point for the current year forecast, relative to the one made a year earlier.

Diminishing long-term growth projections. The 2009 global recession marked a turning point in long-term (ten-years ahead) global growth projections (Kose, Ohnsorge, and Sugawara 2020). Long-term forecasts for global GDP growth increased from 3 percent in 1998 to 3.3 percent in 2008. Since then, they have steadily declined, to 2.5 percent in 2019. Growth forecasts for advanced economies began to be downgraded after the 1991 global recession. After a brief period of upgrades in the late 1990s, they resumed their gradual decline in the early 2000s. In contrast, EMDEs enjoyed improving growth prospects up to the 2009 global recession. Since then, long-term forecasts have materially deteriorated for both groups of countries.

Prior to the 2009 global recession, growth prospects were supported by a rapid expansion of investment, trade, and financial flows. However, during the most recent global expansion, cyclical factors, such as the anemic recovery in advanced economies, a sharp collapse in commodity prices, and weak investment growth, have been compounded by structural weaknesses, including slower productivity growth, and a slowdown in the growth of working-age populations.

These structural factors have been eroding global potential growth—the growth rate that the global economy would sustain at full capacity utilization and full employment. In 2013-17, global potential growth is estimated to have been roughly 1 percentage point a year lower than a decade earlier, as a result of weaker productivity growth, sluggish expansion of investment, and a broadening slowdown in working-age population growth. Annual potential growth estimates for advanced economies were reduced to 1.4 percent on average in 2013-17, from 2.2 percent a decade earlier. Potential output growth in 20