The World Bank cut its growth forecasts for most countries and regions this year. He warned that fresh headwinds could push the global economy into a recession.
The World Bank released its semi-annual Global Economic Outlook (GEP) on Thursday. Under this plan, the global growth rate for 2023 is projected to be 1.7%, which is almost half of the June last year forecast. If forecasts go as planned, it will be the third slowest growth in 30 years, following the contractions of 2009 and 2010.
The World Bank has also cut its growth forecast for 2024, citing persistently high inflation and rising interest rates as the main reasons. He also highlighted the impact of the Russian invasion of Ukraine and the decline in investment.
The change in GDP (YoY) is bound to vary from country to country Source: World Bank
The World Bank forecasts global growth of just 1.7% this year
“The crisis threatening development is getting worse,” World Bank President Malpass said in the report’s preamble, predicting that setbacks to global prosperity are likely to persist. Gross domestic product (GDP) in emerging markets and developing economies will be about 6% lower than expected just before the coronavirus pandemic late next year, he said.
The United States, China and the European Union have entered a period of markedly lower growth, and the impact is exacerbating headwinds in poorer countries, he said. Inflation is easing, but there are signs that price pressures will persist and the central bank may be forced to raise interest rates faster than expected, she said.
“Slowing growth, tighter financial conditions and heavy debt risk undermining investment and leading to corporate insolvencies,” the World Bank said. The world needs urgent action,” it said.
Given the limited policy space, he said three areas are most important:
- Government funding should go to the most vulnerable
- keep inflation expectations under control
- Maintain the resilience of the financial system
The World Bank has called for a “significant increase” in investment in developing countries. “The world is going through a very difficult time, but there is no room for defeatism,” he said, “there are significant reforms we can undertake to create a strong economy that can do that.”
Original title:World Bank cuts forecast for 2023 and warns of global recession(extract)
