The World Bank’s latest “Global Economic Prospects” report predicts 2023 global growth to slow to 1.7% from the 3% expected six months ago
The World Bank expects global growth to slow down sharply due to the elevated inflation, higher interest rates, reduced investment, and disruptions caused by Russia’s invasion of Ukraine.
Moreover, the institution predicts a possible recession that may be triggered by any new adverse development. These can include abrupt rises in interest rates, uncontained inflation that exceeds the predicted rates, a resurgence of the COVID-19 pandemic, or escalating geopolitical tensions.
If that gloomy prediction comes true, this would be the first time in over 80 years that two global recessions occur within the same decade.
The global economy is forecast to grow by 1.7% in 2023 and 2.7% in 2024. The previous projections were revised down for 95% of advanced economies and nearly 70% of emerging market and developing economies.
As for the per-capita income growth, it is projected to average 2.8% in emerging markets and developing economies. That signifies a full percentage decline compared to pre-pandemic levels. In Sub-Saharan Africa, the rate would average just 1.2%, causing extreme poverty rates to rise dramatically. Growth in emerging markets and developing economies is expected to decline from 3.8% in 2022 to 2.7% in 2023.
Meanwhile, growth in advanced economies would slow from 2.5% in 2022 to 0.5% in 2023. In the US, growth is also forecast to fall to 0.5% in 2023 — 1.9% below previous forecasts. In the euro area, zero growth is expected – a downward revision of 1.9%. In China, growth would be more significant – 4.3%, but this is still 0.9% below previous forecasts.