The World Bank has recently released its latest report, Global Economic Prospects. The report has slashed its global growth forecasts from projections made in mid-2022 due to worsening economic conditions. In total, the global economic growth outlook for the global economy has shrunk to 1.7% for 2023. That proposes a significant decrease from its earlier projection of 3%.
Significantly lower prospects for the US economy are pulling the most weight inside the report. It now forecasts the US to grow by only 0.5%, compared to an earlier projection of 2.4%. The World Bank has also cut its growth outlook for China for 2023 from 5.2% to 4.3%. Other major global economies will slow their growth too: Japan from 1.3% to 1%, and Europe and Central Asia from 1.5% to 0.1%.
The World Bank attributes this to an unexpectedly rapid and synchronous global monetary policy tightening. While this may have been necessary to tame inflation, it has slowed global economic activity significantly, according to the report.
The downgraded estimates would mark the third weakest pace of growth in nearly three decades. The World Bank has also adjusted its 2024 forecasts lower, to 2.7% from an earlier prediction of 3% growth. The latest report serves as a reminder of the ongoing challenges faced by the global economy. It also outlines the need for continued efforts to address these challenges and support economic recovery.
Additionally, the report has also highlighted the growing risks to global growth and financial stability. Major issues include rising inflation, interest rate hikes, and geopolitical risks.
The World Bank’s latest report serves as a wake-up call for policymakers. There’s an evident need to take action to address the ongoing challenges faced by the global economy. It is only achievable by engaging in and supporting economic recovery practices, and it’s an urgent matter.