The World Bank is pessimistic for global growth in 2023
It now expects an increase of 1.7% against 3% last June.
The World Bank on Tuesday sharply revised its global growth forecast for 2023 to 1.7%, up from 3% last June, due to inflation, growth rates and the effects of the war in Ukraine. In its report on the global economic outlook, the international body revised down its forecasts for almost all developed countries and about 70% of developing or developing countries, with particularly weak growth in the US and zero in Europe.
Only a moderate global recovery is expected later in 2024 (+2.7%). “This is the weakest growth in three decades“Except for the consequences of the 2008 crisis and the 2020 pandemic,” World Bank research team director Ayhan Köse insisted to AFP.It is a complex evolution for the world economy, and this slowdown is general“.
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The trend could worsen, with a real risk of recession if there is a new shock to the economy due to a rebound in inflation, a new wave of Covid or geopolitical tensions. In the event of a one percent interest rate hike by central banks globally, “global growth will be 0.6% lower, which means a 0.3% drop in GDP per capita.“, and so on “global technical recession“, details Ayhan Kose. In such a scenario, the 2020s would be the first decade since World War II to experience two recessions, the WB said in its report.
It is in developed countries that the slowdown will be most sensitive, the World Bank believes: it predicts a growth of only 0.5% in the United States (it was 1.9% in June of last year), and no GDP growth in the euro zone (and vice versa 1, 9%). But developing countries are not spared, with Chinese growth now expected to be 4.3% (down 0.9 percentage points) and other developing and developed countries should see their economies grow by 2.7%.
The fight against poverty and global warming has had an impact
The World Bank is concerned about the consequences of this slowdown, both socially and in terms of combating global warming. In Sub-Saharan Africa, where 60% of people are considered to be in extreme poverty, the expected growth should not be enough to effectively fight poverty. “We expect 1% growth in GDP per capita, well below what is needed to eradicate extreme povertyAyhan Kose said.it will be almost impossible to reduce poverty and even inequality to the desired level“.
Especially since most of the countries involved are also facing a difficult situation regarding their public debts, both the World Bank and the International Monetary Fund (IMF) have repeatedly warned about the risk of about sixty countries turning in a public debt crisis. “Some states are simply trying to meet their debt obligations. In the context of the slowdown, this means that they do not have the funds to act against poverty and finance health or education.“said Ayhan Kose.
The same applies to the fight against global warming, while investments at the global level are expected to decrease until 2023.Investments have been low in the last decade, more so in the last three years and should be even lower in the next two years.“, according to Ayhan Kös.
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However, a World Bank report estimates that a climate-related natural disaster affecting one of the world’s 37 smallest countries with a population of less than 1.5 million could cause a 5% drop in GDP for those countries. . “These are countries already weakened by the pandemic, whose economies have not recovered as strongly because they are based in part on tourism, and now face tougher financial conditions. They do not have the capacity to cope with the economic consequences of a climate event“said Ayhan Kose.
