After a sharp recovery in 2021 from the depths of the pandemic, the global economy is expected to grow 3 percent in 2022, down from a 2.6 percent rate last year and expected to register a modest 2.4 percent this year, the bank said in its annual global economic report. Opportunities report. Those rates have lagged behind an average of 3.1 percent in the decade of the 2010s.
The continued slowdown guarantees that world leaders will fail to meet the 2030 development goals agreed in 2015 by the 193 members of the United Nations, including the United States. Governments pledged to transform the global economy by the end of the decade. 17 ambitious goals, including ending extreme poverty, halving greenhouse gas emissions, improving education for the poor and ending hunger.
Proceedings are not legally binding. But as a result of three years of negotiations, culminating in a speech by Pope Francis to the United Nations, they were seen as packing a moral punch.
“The 2020s have so far been a time of broken promises. “Governments around the world have missed the 'unprecedented' targets they pledged to meet by 2020,” Gill wrote in the foreword to the report, which labeled the outlook as “dismal”.
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A quarter of the world's developing countries are poorer today than they were before the pandemic, the bank said.
“When you look at the big picture, it's not pretty,” said Ayhan Ghose, the bank's deputy chief economist.
However, the bank celebrated progress in bringing inflation under control. Globally, inflation is expected to average 3.7 percent this year, up from 5.3 percent in 2023.
But prices will continue to rise more this year than central banks such as the Federal Reserve say they will.
“I suggest we don't pop the champagne yet,” said Goss.
The bank's forecast is for the US to grow by 1.6 percent this year, twice as fast as Europe or Japan. China is expected to grow 4.5 percent, up from 5.2 percent last year, as its post-Covid reopening fades.
In the long term, deceleration is the only problem for advanced economies and middle-income countries. One reason for the anemic growth in the latter period is the sharp fall in investment spending, which is running at half the average rate seen over the past two decades.
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By implementing policy changes such as expanded trade and capital flows and government budget regulation, developing countries can stimulate an investment boom, the bank said, citing historical examples. In 192 episodes since 1950, countries such as Chile, Colombia, and Turkey increased their annual economic growth rates by nearly a third, due to higher spending on new plants and equipment.
During such periods, developing countries have expanded their economies by about 40 percent in six years, the report says.
While bank economists expect a good year ahead, they cautioned that conditions will disappoint rather than create a positive surprise. The war in Gaza – combined with the ongoing hostilities in Ukraine – could hamper global growth. Escalating fighting in the Middle East could send oil prices well above their current $75-a-barrel level, slowing growth and raising inflation.
Attacks on shipping through the Red Sea have prompted cargo ships to take the long, expensive route around the southern tip of Africa. In the 10 days ending January 2, the volume of trade through the Suez Canal, which links the Red Sea to the Mediterranean, fell 28 percent, according to the International Monetary Fund.
Disruption to that key shipping route, if it continues, could put pressure on prices in the U.S. and elsewhere.