Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

World Bank warns global economy faces grim outlook

World Bank warns global economy faces grim outlook

The bank predicts a "pronounced slowdown", with global economic growth falling to 4.1% this year

The global economy faces a "grim outlook", World Bank president David Malpass has warned, as the aftershocks of the pandemic continue to weigh on growth - especially in poor countries.

His organisation's latest forecast predicts global growth will slow to 4.1% this year from 5.5% in 2021.

It attributed the slowdown to virus threats, government aid unwinding and an initial rebound in demand fading.

But Mr Malpass said his greatest worry was widening global inequality.

"The big drag is the inequality that's built into the system," he told the BBC, noting that poorer countries were especially vulnerable to economic damage from efforts to fight inflation.

"The outlook for the weaker countries is still to fall further and further behind. That causes insecurity."

By 2023, economic activity in all advanced economies, such as the US, Euro area and Japan, is likely to have recovered from the hit it took during the pandemic, the bank said.

But output in developing and emerging countries is expected to remain 4% lower than it was before Covid struck.


Mr Malpass blamed stimulus programmes in the richest countries for worsening the divide by driving global inflation. While officials in many countries, including the US, are now expected to raise interest rates to try to rein in price increases, Mr Malpass warned higher borrowing costs could hurt economic activity - especially in weaker economies.

"The problem with rate hikes is it hurts people that need floating rate money... and that's usually new businesses, women-owned businesses, developing country businesses," Mr Malpass said.

Separately, the World Economic Forum (WEF) warned that divergent economic recoveries were making it harder to collaborate on global challenges such as climate change.

"Widening disparities within and between countries will not only make it more difficult to control Covid-19 and its variants, but will also risk stalling, if not reversing, joint action against shared threats that the world cannot afford to overlook," the WEF said in its annual global risks report on Tuesday.

The World Bank's Global Economic Prospects report said that in 2021 the world's economy bounced back from the pandemic with the strongest post-recession expansion in 80 years.

But the gains are expected to slow this year, as virus variants and rapidly rising prices for items such as food and energy weigh on households. Globally, inflation is at its highest rate since 2008, the report says.

The bank, which lends to countries around the world, also warned that supply chain bottlenecks and the unwinding of stimulus programmes posed risks.

The slowdown in the second half of 2021 was already larger than the bank had expected in its June forecast due to the spread of the Omicron and Delta Covid variants. It expects a "pronounced slowdown" this year, and predicts global growth will decelerate further in 2023, to 3.2%.

"The reality is that Covid and the shutdowns are still taking a huge toll and that's especially true on people in poorer countries," Mr Malpass said. "Just a grim outlook."

David Malpass warned rate rises could hit growth in weaker economies


Driving the global slowdown are China, where the rate of growth is expected to drop to 5.1% from 8% last year, and the US, which is forecast to expand by 3.7% this year compared with 5.6% in 2021. In the eurozone, expansion will slow to 4.2% this year from 5.2%, the bank predicts.

India presents a bright spot, with the growth rate expected to rise from 8.3% to 8.7% this year.

But many emerging markets continue to struggle with additional challenges, such as lower vaccination rates.

In Latin America and the Caribbean, for instance, growth is expected to slow to 2.6% in 2022, from 6.7% last year.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Munich Airport Reopens After Second Drone Shutdown
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
The Personality Rights Challenge in India’s AI Era
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Study Finds No Safe Level of Alcohol for Dementia Risk
Trump Says Ukraine Can Fully Restore Borders with NATO Backing
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Germany Weighs Excluding France from Key European Fighter Jet Programme
Cyberattack Disrupts Check-in and Boarding Systems at Major European Airports
Björn Borg Breaks Silence: Memoir Reveals Addiction, Shame and Cancer Battle
When Extremism Hijacks Idealism: How the Baader-Meinhof Gang Emerged and Fell
JWST Data Brings TRAPPIST-1e Closer to Earth-Like Habitability
Trump Orders $100,000 Fee on H-1B Visas and Launches ‘Gold Card’ Immigration Pathway
France’s Looming Budget Crisis and Political Fracture Raise Fears of Becoming Europe’s “Sick Man”
Three Russian MiG-31 Jets Breach Estonian Airspace in ‘Unprecedentedly Brazen’ NATO Incident
European manufacturers against ban on polluting cars: "The industry may collapse"
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
Christian Brueckner Released from German Prison after Serving Unrelated Sentence
World’s Longest Direct Flight China Eastern to Launch 29-Hour Shanghai–Buenos Aires Direct Flight via Auckland in December
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
U.S. and China Agree on Framework to Shift TikTok to American Ownership
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
The New Life of Novak Djokovic
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
×