Washington, Jan. 10 (BNA): The World Bank lowered its growth forecasts for 2023 on Tuesday to levels that teeter on the brink of recession for many countries, as the impact of higher interest rates on the central bank intensifies and major economic engines falter in the world.
The development bank said it expects global gross domestic product to grow by 1.7% in 2023, the slowest pace outside the 2009 and 2020 recessions since 1993.
In its previous report on global economic prospects in June 2022, the bank projected global growth in 2023 at 3.0%, Reuters reports.
It expects global growth in 2024 to rise to 2.7% – down from the 2.9% estimate for 2022 – and said average growth for 2020-2024 will be less than 2% – the slowest pace in five years since 1960.
The bank said significant slowdowns in advanced economies, including sharp cuts to its forecasts to 0.5% for both the United States and the eurozone, could herald a new global recession less than three years after the last one.
The World Bank said the bleak outlook will be particularly difficult for emerging market and developing economies, as they struggle with heavy debt burdens, weak currencies, income growth and slowing business investment which is now projected to average 3.5% annual growth over the year. The next two years – less than half the pace of the past two decades.
The World Bank indicated that some inflationary pressures have begun to ease as 2022 draws to a close, with lower energy and commodity prices, but it warned that the risks of new supply disruptions are high, and that high core inflation may persist.
He added that this could cause central banks to respond by raising interest rates more than currently expected, making the global slowdown worse.
The Bank called for increased support from the international community to help low-income countries deal with food and energy shocks, people displaced by conflict, and the heightened risk of debt crises.
The report said new concessional financing and grants are needed, as well as leveraging private capital and domestic resources to help boost investment in climate adaptation, human capital and health.
The report comes as the World Bank’s board is expected to consider this week a new “evolution roadmap” for the institution to significantly expand its lending capacity to address climate change and other global crises.
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