Dramatic scenario for the global economy, according to the latest World Bank report

The World Bank has worsened its forecast for the global economy this year: in a report released on Tuesday, it predicted so will slow down dramatically this year as a result of high inflation, rising interest rates, reduced investment and the impact of the war in Ukraine. But, moreover, he warned that the world risks falling back into another recession as happened during the pandemic.

In a report presented in Washington, the World Bank forecasts global growth of by 2023 only 1.7%, while 6 months ago they predicted 3%. They expect similar growth next year.

But in addition to presenting a complicated picture, the Bank expects it could be even worse because there is a risk of suffering another global recession as during the pandemic.

The report warns that “given the fragile economic situation, each new adverse event – such as higher than expected inflation, sharp interest rate hikes to contain it, the resurgence of the pandemic of COVID19 or the intensification of geopolitical tensions, could push the world economy into a recession. It would be the first time in more than 80 years that two global recessions have occurred in the same decade.

The world economy is forecast to grow by 1.7% in 2023 and 2.7% in 2024. “The sharp slowdown in growth will be widespread: forecasts will be revised downwards for 95% of advanced economies and nearly 70 % of emerging markets and developing economies,” warns the report.

“The crisis facing development is intensifying as global growth prospects deteriorate,” said David Malpass, president of the World Bank group.

Emerging countries with “several years of slow growth”

“Emerging and developing countries are facing a period of several years of slow growth driven by a heavy debt burden and low investment; at the same time, global capital is being absorbed by advanced economies facing extremely high levels of public debt and rising interest rates,” Malpass added.

“The low level of growth and business investment will aggravate the situation setbacks in education, health care, poverty and infrastructurewhich are already devastating, as are the growing demands resulting from climate change,” he added.

advanced economies

Growth is expected in advanced economies will slow from 2.5% in 2022 to 0.5% in 2023. Over the past two decades, slowdowns of this magnitude have been the prelude to a global recession, warns the Bank.

US growth is expected to fall to 0.5% in 2023, 1.9 percentage points below previous forecasts and the worst performance outside of official recessions since 1970.

By 2023, the euro area should do so no growth, which represents a downward revision of 1.9 percentage points. China will grow by 4.3%, or 0.9 percentage points below previous forecasts.

Excluding China, growth in developing countries is expected to slow from 3.8% in 2022 to 2.7% in 2023, reflecting significantly lower external demand, exacerbated by high inflation, currency depreciation, more restrictive financing and other adverse domestic factors.

By the end of 2024, growth in emerging and developing economies will be about 6% below projected levels before the pandemic. While global inflation is expected to moderate, it will remain above pre-pandemic levels.

The report also warns of a lack of investment, which is of concern because it is associated with low levels of productivity and economic activity, and worsens the overall economic outlook.

Washington correspondent

ap​