Global economic growth is under threat, according to a World Bank report. According to the report, Global economic growth will slow down to 4.1 percent in 2022 and 3.2 percent in 2023. This decline will be a result of new threats posed by Corona variants, as well as an increase in inflation, debt, and income inequality. In 2021, global economic growth is expected to go as low as 5.5 percent.
According to the World Bank's latest Global Economic Prospects report, the global economy is entering a clear recession after a strong uptick in 2021, owing to new threats such as the COVID-19 variant and rising inflation, debt, and income inequality, which are emerging and could jeopardize developing economies' ability to recover.
"The world economy is facing COVID-19, inflation, and policy uncertainty at the same time, and government spending and monetary policies are in uncharted territory", World Bank Group President David Malpass said in a report released Tuesday. “Growing inequality and security challenges are especially detrimental to developing countries."
"Concrete international action and broader national policy responses are required to put more countries on a favorable growth trajectory," said Malpass.
According to the World Bank, the new coronavirus outbreak, persistent supply-chain bottlenecks, and inflationary pressures, along with the world's largest High financial vulnerabilities in sectors can increase the risk of a hard landing at a time when governments in many developing economies already lack the policy to support activities when needed.
The slowdown between advanced and emerging and developing economies will coincide with a significant difference in growth rates. Growth in advanced economies is expected to slow from 5% in 2021 to 3.8 % in 2022 and 2.3 % in 2023. However, growth in emerging and developing economies is expected to slow from 6.3% in 2021 to 4.6% in 2022 and 4.4% in 2023.
"By 2023, all advanced economies will have achieved full production recovery", according to the report, "while output in emerging and developing economies will remain 4 percent below pre-pandemic trend."
For many vulnerable economies, the blow is even more severe. Fragile and conflict-torn economies will produce 7.5 percent less than their pre-pandemic trend, while small island states will produce 8.5 percent less.