The world Bank today reduced its growth prospects for the global economy to 1.7% in 2023 -below the 3% forecast six months ago- and 2.7% for 2024.
According to the international body, global growth “is slowing dramatically” due to high inflation, higher interest rates, reduced investment and disruptions caused by the Russian invasion of Ukraine.
“The sharp slowdown in growth is expected to be widespread, with downwardly revised forecasts for 2023 for 95% of advanced economies and almost 70% of emerging market and developing economies,” it remitted in its report.
The scenario could be even worse. For the World Bank, given the fragile economic conditions, any new adverse event, such as higher than expected inflation, abrupt increases in interest rates to contain it, a resurgence of the COVID-19 pandemic or an increase in geopolitical tensions, “could push the world economy into recession.”
“This would mark the first time in more than 80 years that two global recessions have occurred in the same decade,” he anticipated.
World Bank: Emerging Economies Hit
Over the next two years, the World Bank projects per capita income growth in emerging market and developing economies to average 2.8%, a full percentage point less than the 2010-2019 average.
In sub-Saharan Africa, which accounts for around 60% of the world’s extreme poor, per capita income growth during 2023-24 is expected to average just 1.2%, a rate that could drive poverty rates higher , do not decrease.
“The crisis facing development is intensifying as global growth prospects deteriorate,” said World Bank Group President, David Malpass.
By the end of 2024, GDP levels in emerging and developing economies will be about 6% below expected levels before the pandemic. Although global inflation is expected to moderate, it will remain above pre-pandemic levels.
Over the period 2022-2024, gross investment in these economies is likely to grow by around 3.5% on average, less than half the rate that prevailed in the previous two decades.
World Bank: US, Europe and China in 2023
Growth in advanced economies is projected to slow from 2.5% in 2022 to 0.5% in 2023. Over the past two decades, slowdowns on this scale heralded a global recession.
In the United States, growth is forecast to fall to 0.5% in 2023, 1.9 percentage points below previous forecasts and the weakest performance outside of official recessions since 1970.
In 2023, growth in the euro area is expected to be zero percent, a downward revision of 1.9 percentage points.
In China, growth of 4.3% is projected in 2023, 0.9 percentage points below previous forecasts.
Excluding China, growth in emerging market and developing economies is expected to slow from 3.8% in 2022 to 2.7% in 2023, reflecting significantly weaker external demand compounded by high inflation, currency depreciation, tighter financial conditions and other internal obstacles.
World Bank: Regional Perspectives 2023
- East Asia and the Pacific: Growth is projected to slow to 4.3% in 2023 before rising to 4.9% in 2024.
- Europe and Central Asia: Growth is expected to slow to 0.1% in 2023 before rising to 2.8% in 2024.
- Latin America and the Caribbean: Growth is expected to slow to 1.3% in 2023 before recovering to 2.4% in 2024.
- Middle East and North Africa: Growth is expected to slow to 3.5% in 2023 and 2.7% in 2024.
- South Asia: Growth is forecast to slow to 5.5% in 2023 before rising to 5.8% in 2024.
- Sub-Saharan Africa: Growth is expected to slow to 3.6% in 2023 and rise to 3.9% in 2024.
Source: Larepublica
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