World Bank pessimistic for global growth in 2023 – Finance

The international organization said so in its report on the global economic situation. revised its forecasts for almost all developed countries and about 70% of developing countries or developing, 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“Excluding the consequences of the 2008 crisis and the pandemic in 2020, WB research team director Ayhan Köse insisted to AFP that ‘this is a complex development for the world economy and this slowdown is general.'” And the trend may worsenwith real risk declineif there is a new shock to the economy due to a rebound in inflation, a new wave of Covid or geopolitical tensions.

case an increase of one percentage point by central banks globally”global growth will be 0.6% lowerthis means a decrease of 0.3% of GDP per capita” and therefore “global technical recession”, detailed Mr. Kos. In such a case, 2020 will be the first decade after World War II DB noted in its report that it will face two recessions.

This the slowdown will be more pronounced in developed countriesEstimates of the World Bank: it predicts growth of only 0.5% in the US (vs. 1.9% last June) and no GDP growth in the euro zone (also v. 1.9%). But developing countries are not left out.Chinese growth was now expected at 4.3% (down 0.9 percentage points) and other developing and developed countries should see their economies expand by 2.7%.

The fight against poverty and global warming has had an impact

WB is worried about the consequences of this slowdownboth socially and in terms of fighting global warming.

In sub-Saharan AfricaCovering 60% of people considered to be in extreme poverty, the expected increase should not be enough to fight poverty effectively. “We expect a 1% increase in GDP per capitathis is much lower than what is needed to eliminate extreme poverty”, said Ayhan Kose, “it will be almost impossible to reduce poverty and even inequality to the desired level”.

Especially since then most of the countries concerned also faced a difficult situation Regarding their public debts, both the World Bank and the International Monetary Fund (IMF) have repeatedly warned about the risk of falling into a public debt crisis of about sixty countries. “Some states are simply trying to fulfill their debt obligations. In times of recession, that means they can’t afford to take action against poverty or fund health or education,” Kose said.

It goes for the same fight against global warmingBy 2023, investments at the global level are expected to decrease. “In the last ten years, investments have been lowit should be more in the last three years and even lower in the next two years”, according to Ayhan Köse.

However, the WB report estimated 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 these countries. “These are countries already weakened by the pandemic because their economies are not recovering strongly. partly engaged in tourism and now facing tighter financial conditions. They do not have the capacity to cope with the economic consequences of the climate event,” Kose said.

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, with especially weak growth in the United States and zero growth in Europe. After that, only a modest global recovery is expected in 2024 (+2.7%). “This is the weakest growth in three decades, excluding the effects of the 2008 crisis and the 2020 pandemic,” he told AFP. Ayhan Köse insisted. , director of the WB research group, “this is a complex development for the world economy and this slowdown is general.” 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. A one percentage point increase in the interest rate central banks at the global level, “global growth will be 0.6% lower, which means a 0.3% decrease in GDP per capita” and therefore “recession in world technology”, said Mr. Kose. In such a scenario, the 2020s would be the first decade since World War II to experience two recessions, the WB noted in its report, with the slowdown most likely to occur in developed countries, the World Bank estimates: it would only be 0.5% in the US (last against 1.9% in June) and no GDP growth in the euro zone (also against 1.9%). But developing countries are not left out, with China’s 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%. Fighting poverty and global warming affected The World Bank is concerned about the consequences of this slowdown, both from a social point of view and in terms of the fight against global warming. The expected growth in sub-Saharan Africa, where 60% of people are considered to be in extreme poverty, should not be enough to effectively fight against poverty. “We expect a 1% increase in GDP per capita, which is much lower than what is needed to eliminate extreme poverty,” said Ayhan Köse, “and it will be almost impossible to reduce poverty or inequality to the level we want.” Especially since most of the countries concerned are 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 falling into a public debt crisis for about 60 countries. “Some countries are simply trying to meet their debt obligations. In a slowdown, that means they don’t have the money to act on poverty or fund health or education,” Mr. Kose said. global warming, and global investment is expected to decline until 2023. According to Ayhan Kösen, “Investments have been low in the last ten years, more in the last three years and should weaken further in the next two years.” . However, the WB 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 result in a 5% reduction in GDP for those countries. “These are countries that have already been weakened by the pandemic, have not experienced such a strong recovery because their economies are partly based on tourism, and are now facing tougher financial conditions. They do not have the ability to deal with the economic consequences of the climate event,” Kose said.