The World Bank is pessimistic for growth in 2023
On Tuesday, the World Bank sharply revised its global growth forecast for 2023. It now expects growth of 1.7%, up from 3% last June, due to persistent inflation, rising interest rates and the effects of the war in Ukraine.
In its report on the global economic outlook, the international body revised its forecasts for almost all developed countries and about 70% of developing or developing countries, predicting 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,” World Bank President David Malpass said at a press conference.
It expects a moderate global recovery only in 2024 (+2.7%).
If inflation rebounds, a new wave of COVID-19 or geopolitical tensions take another hit to the economy, this trend could worsen with a real risk of recession.
If interest rates were raised by central banks around the world by one percentage point, “global growth would be 0.6% lower, which would mean a 0.3% drop in GDP per capita,” and therefore a “global technical recession,” according to Agence France-Presse. detailed information is given for – Director of the research group of the World Bank, Ayhan Köse, in a press release.
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 are not worried either, growth was now expected at 4.3% (down 0.9 percentage points) in China and 2.7% in other developing and developed countries.
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 make the fight against poverty possible.
“We expect a 1% increase in GDP per capita, which 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 level we want. »
Especially since most of the countries concerned are facing a difficult situation with regard to public debts, both the World Bank and the International Monetary Fund have repeatedly warned of the risk of falling into a sovereign debt crisis for sixty countries. .
The president of the organization reminds: “We have regularly advocated for a quick and effective debt restructuring, but the negotiations are deadlocked. »
“The risks of a debt crisis and political instability could push millions into poverty and hamper countries’ ability to meet basic needs and the consequences of global warming,” Mr Malpass said.
The fight against global warming is already a victim of the slowdown, as global investment is expected to decline through 2023.
According to Ayhan Kösen, “Investments have been low in the last decade, increased in the last three years and should be even lower in the next two years.”
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 national domestic product.
Countries “already weakened by the pandemic” and “lacking the power to deal with the economic consequences of a climate event”, adds Mr Kose.