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THE World Bank says global economic growth is slowing down sharply in the face of elevated inflation, higher interest rates, reduced investment, and disruptions caused by Russia’s invasion of Ukraine.
Given fragile economic conditions, any new adverse development, such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the Covid-19 pandemic, or escalating geo-political tensions, could push the global economy into recession, it warned in its latest Global Economic Prospects report.
“This would mark the first time in more than 80 years that two global recessions have occurred within the same decade,” said the global financial institution in a press release shared with the media today.
“The global economy is projected to grow by 1,7 percent in 2023 and 2,7 percent in 2024. The sharp downturn in growth is expected to be widespread, with forecasts in 2023 revised down for 95 percent of advanced economies and nearly 70 percent of emerging market and developing economies.
“Over the next two years, per-capita income growth in emerging markets and developing economies is projected to average 2,8 percent—a full percentage point lower than the 2010-2019 average.”
The World Bank report indicates that sub-Saharan Africa, which accounts for about 60 percent of the world’s extreme poor—growth in per capita income over 2023-24, is expected to average just 1,2 percent, a rate that could cause poverty rates to rise, not fall.
“The crisis facing development is intensifying as the global growth outlook deteriorates,” World Bank Group president, David Malpass, said
“Emerging and developing countries are facing a multi-year period of slow growth driven by heavy debt burdens and weak investment, as global capital is absorbed by advanced economies faced with extremely high government debt levels and rising interest rates. “Weakness in growth and business investment will compound the already-devastating reversals in education, health, poverty, and infrastructure and the increasing demands from climate change.”
According to the report, growth in advanced economies is projected to slow down from 2,5 percent in 2022 to 0,5 percent in 2023.
“Over the past two decades, slowdowns of this scale have foreshadowed a global recession,” said the World Bank.
Bongani Ndlovu
Online Reporter