Washington, June 7 (FN Agency) The World Bank has revised its 2022 global growth forecast downward from 4.1 per cent to 2.9 per cent. “Global growth is expected to slump from 5.7 per cent in 2021 to 2.9 per cent in 2022— significantly lower than 4.1 percent that was anticipated in January,” the World Bank said on Tuesday in its Global Economic Prospects report. In Europe and Central Asia, the regional economy is expected to contract by 2.9 per cent this year before growing by 1.5 per cent in 2023, while in East Asia and the Pacific the growth is projected to decelerate to 4.4 per cent this year and increase to 5.2 per cent in 2023, the report added.
In Sub-Saharan Africa, the World Bank expects GDP to grow by 3.7 per cent in 2022 and 3.8 per cent in 2023. Latin America and the Caribbean will see their economic growth slowing down to 2.5 per cent in 2022 and 1.9 per cent in 2023, while the Middle East and North Africa may see the growth of 5.3 per cent in 2022 before slowing to 3.6 per cent in 2023, the report noted. In general, the World Bank expects the situation will raise the risk of stagflation, with potentially harmful consequences for middle- and low-income economies alike. The bank projects that this growth trend will persist in next two years. “It is expected to hover around that pace over 2023-24, as the war in Ukraine disrupts activity, investment, and trade in the near term, pent-up demand fades, and fiscal and monetary policy accommodation is withdrawn,” the report said.
Damages from the pandemic and the conflict will significantly decrease the level of per capita income in developing economies, which will be nearly 5 per cent below its pre-pandemic trend, it added. World Bank President David Malpass noted that all these factors and Covid-19 lockdowns in China are “hammering growth.” He warned that many countries may face recession. “Markets look forward, so it is urgent to encourage production and avoid trade restrictions. Changes in fiscal, monetary, climate and debt policy are needed to counter capital misallocation and inequality,” Malpass said.