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Global Economic Prospects: The World Bank’s Most Recent Report
- January 12, 2023
- Posted by: Admin
- Category: International Current Affairs Current Affairs Indian Economy Indian Nation and State Current Affairs MPPSC State PSC Exams
Global Economic Prospects: The World Bank’s Most Recent Report
The World Bank has released its most recent assessment on the state of the global economy, which details a slowdown in growth due to a number of issues, including high inflation, increased interest rates, less investment, and interruptions brought on by Russia’s invasion of Ukraine. According to the report, any further unfavourable events, such as a resurgence of the COVID-19 pandemic or rising geopolitical tensions, could cause the global economy to contract, which would be the first time in more than 80 years that two recessions of this magnitude have occurred within the same decade.
Growth Prospects
The global economy is expected to rise 1.7% in 2023 and 2.7% in 2024, according to the analysis. The growth slowdown is anticipated to be widespread, with predictions for 2023 being revised downward for approximately 70% of emerging market and developing economies and 95% of advanced economies. The average per-capita income growth in emerging market and developing nations is anticipated to be 2.8% during the next two years, which is one full percentage point less than the average for the period from 2010 to 2019.
Impact on Developing Nations
According to the report, the development issue is worsening as the global growth forecast worsens. As global capital is absorbed by established economies, emerging and developing countries are facing a multi-year phase of slow development caused by high debt loads and low investment. This will have a negative impact on business investment and growth, aggravating the already disastrous changes in infrastructure, health, education, and poverty as well as the mounting demands of climate change. It is estimated that growth in per capita income in Sub-Saharan Africa, which is home to nearly 60% of the world’s extreme poor, will average just 1.2% from 2023 to 2024. At this rate, poverty rates may increase rather than decline.
Developed Economies
According to projections, growth in developed economies will drop from 2.5% in 2022 to 0.5% in 2023. Slowdowns of this size have predicted a worldwide recession over the past 20 years. The United States is expected to experience its worst growth outside of formal recessions since 1970 in 2023, when it is predicted to drop to 0.5%. Growth in the Eurozone is predicted to be zero percent in 2023, while growth in China is predicted to be 4.3%.
Developing and Emerging Market Economies
Excluding China, growth in emerging market and developing economies is predicted to slow from 3.8% in 2022 to 2.7% in 2023, owing to notably lower external demand, high inflation, currency depreciation, tighter financing conditions, and other domestic obstacles. The GDP levels in emerging and developing economies will be about 6% below what was anticipated before the epidemic by the end of 2024. Although it is predicted that worldwide inflation would moderate, it will still be higher than before the pandemic.
Growth in Investment
The report also provides an in-depth analysis of the medium-term forecast for investment growth in emerging and developing nations. Gross investment in these economies is predicted to expand by an average of 3.5% between 2022 and 2024, which is less than half the rate seen over the previous two decades. The research provides policymakers with a range of options for boosting investment growth, including implementing thorough reforms to the investment climate and creating good frameworks for fiscal and monetary policy.
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