The World Bank revises its forecast for 2023 to 1.7% global growth
The World Bank (WB) on Tuesday 10 January 2023 sharply revised its global growth forecast to 1.7% from 3% last June due to persistent inflation, rising rates and the effects of war. Ukraine.
Zero growth in Europe
In its report on the world economic outlook, the international body revised its forecasts for almost all developed countries and about 70% of developing or developing countries, especially weak growth in the United States and zero growth in Europe.
“I am very concerned about the risk of the slowdown continuing. According to our estimates, global growth between 2020 and 2024 will be less than 2%. This is the weakest five-year growth since 1960.” The president of the World Bank, David Malpass, said this at a press conference.
It expects a moderate global recovery only in 2024 (+2.7%).
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.
If global central banks raise interest rates by one percentage point, “Global growth will be 0.6% lower, which means GDP per capita will decrease by 0.3%” and so on “Global technical recession”, details forAFP Ayhan Kose, director of DB Research Group.
In such a scenario, the 2020s would be the first decade since World War II to experience two recessions, the World Bank said.
It is in developed countries that the slowdown will be more noticeable. The agency forecasts just 0.5% growth in the US (vs. 1.9% last June) and zero growth in the euro zone (also v. 1.9%).
But developing countries have not been left out, with Chinese growth now expected at 4.3% (down 0.9 percentage points) and 2.7% in other developing and developed countries.
A concern for poor countries
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 make the fight against poverty possible.
“We expect GDP per capita growth of 1%, which is far below what is needed to eradicate extreme poverty,” Ayhan Kose noted “It will be almost impossible to reduce poverty or inequality to the level we want”.
Both the World Bank and the International Monetary Fund (IMF) have repeatedly warned about the risk of a sovereign debt crisis for about sixty countries, especially since most of the countries concerned are facing a difficult situation with regard to public debts.
The president of the institution mentioned this “We have regularly advocated for quick and effective debt restructuring, but negotiations are deadlocked”.
The fight against global warming has had an impact
“The risks of a debt crisis and political instability could push millions into poverty and hamper countries’ ability to meet their basic needs and the consequences of global warming.” – Mr. Malpass worried.
The fight against global warming is already a victim of a slowdown, and global investment is expected to decline through 2023.
“Investment has been low in the last ten years, increased in the last three years and should be even lower in the next two years,” According to Ayhan Kös.
According to World Bank estimates, a climate-induced 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 these countries.
Countries “Already weakened by the pandemic” and this “inability to cope with the economic consequences of a climate event”, according to Mr. Kose.