The World Bank on Tuesday cut its growth forecasts for various regions across the world amid high debt levels and rising income inequality exacerbated by the ongoing COVID-19 pandemic.
It said that the world would experience “markedly” decelerated growth in 2022, down to 4.1% from 5.5% last year. The World Bank added that global growth would contract further in 2023 and hit 3.2% as governments grapple with the enormous fiscal and monetary support measures provided during the early stages of the pandemic and as pent-up demand dissipates.
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Further, the numbers could slip even further if the omicron variant continues to wreak havoc around the world.
The World Bank’s forecast for the coming year is the first by a major global institution and is 0.2% lower than its earlier ‘Global Economics Prospect’ report released in June 2021.
Specifically, the bank said that the US would see growth rates of 3.7% and 2.6% in 2022 and 2023, respectively, down significantly from 5.6% in 2021. China, meanwhile, would see its GDP growth rate drop from 8% in 2021 to 5.1% and 5.2% in 2022 and 2023, respectively.
In general terms, growth in emerging and developing economies would contract to 4.6% and 4.4% in 2022 and 2023, respectively, down from 6.3% in 2021.
As for conflict-ridden and fragile economies, growth in 2022 would be 7.5% below their pre-pandemic growth rates, the bank added.
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At a news conference, World Bank President David Malpass said, “Developing countries are facing severe long-term problems related to lower vaccination rates, global macro policies and the debt burden,” adding that developing economies are experiencing troubling reversals in data on poverty, nutrition, health and education.
Notably, the bank also said that inflation, which adversely impacts low-impact groups, was at its highest since 2008 in advanced economies, and since 2011 in developing economies.
