World Bank report forecasts bleak global economic outlook, citing “adverse developments” and a “sustained slowdown”

According to the report, growth forecasts for 2023 have been cut across the board, with the global economy expected to grow by 1.7 percent in 2023 and 2.7 percent in 2024. The World Bank also cited a number of adverse developments that could push the global economy into a deep recession.

The World Bank report calls for action on climate change and increased investment to offset negative economic shocks.

The World Bank, the financial organization with 174 member countries, released its Global Economic Outlook report on Tuesday. The report predicts a “a sharp and sustained downturn that will hit developing countries hard“. The World Bank cites numerous problems that weigh on the global economy, including the Covid-19 pandemic and “escalating geopolitical tensions“to explain why the global economy may be entering a recession. The report also cites interest rate hikes by central banks and a “higher than expected inflation” as factors contributing to this “unfavorable evolution“.

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World Bank report predicts bleak global economic outlook, citing a
World Bank GDP growth forecasts for 2023 and 2024.

The World Bank forecast report further detailed that inflation had declined to some extent by the end of 2022. It also notes that the surge in commodity and energy prices has subsided for now. However, the World Bank warns that global economies are likely to see continued inflation and supply disruptions from adversities such as the Covid-19 pandemic and the Ukraine-Russia war in Europe. If inflation persists, the World Bank warns that benchmark bank rates could continue to rise to curb inflationary pressures.

World Bank report predicts bleak global economic outlook, citing a
Continued from the World Bank’s GDP growth forecasts for 2023 and 2024.

Growth in advanced economies is expected to slow from 2.5 percent in 2022 to 0.5 percent in 2023. Over the past two decades, slowdowns of this magnitude have foreshadowed a global recession“, details the World Bank’s Global Economic Outlook report. “In the United States, growth is expected to fall to 0.5 percent in 2023-1.9 percentage points below previous forecasts and the weakest performance outside of official recessions since 1970. Eurozone growth in 2023 is expected to be zero percent-a downward revision of 1.9 percentage points. In China, growth is expected to reach 4.3 percent in 2023 – 0.9 percentage points lower than previously forecast.

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The report’s summary concludes that “one thing that can help the global economy is to improve”long-term growth prospects by building resilience to climate change.“The World Bank insists that policymakers must “address climate change and support people affected by crises and hunger.“In order to “compensate for the long-term damage caused by the adverse shocks of the past three years“, emerging markets and developing economies will need to “significantly increase their investments“, according to the World Bank report.

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