Global growth to slow in 2023, trade to grow at less than a third the pace before pandemic: World Bank

Global economy will grow at a rate of 2.1 per cent in 2023 against 3.1 per cent in 2022, according to the World Bank’s latest Global Economic Prospects report. 

In 2023, trade will grow at less than a third of its pace in the years before the pandemic, the international financial institution noted.

In emerging markets & developing countries (EMDE) other than China, growth is set to slow to 2.9 per cent this year from 4.1 per cent last year, it added. This will seriously hurt prospects of a post-pandemic economic rebound in these countries.

High global interest rates have put these economies at a high risk of financial stress. One out of every four EMDEs has effectively lost access to international bond markets with increasingly restrictive global credit conditions, according to a statement by World Bank. It added: 

The squeeze is especially acute for EMDEs with underlying vulnerabilities such as low creditworthiness. Growth projections for these economies for 2023 are less than half those from a year ago, making them highly vulnerable to additional shocks.

India will remain the fastest-growing economy among the largest EMDCs although the country’s gross domestic product growth is expected to slow to 6.3 per cent in 2023-24, the World Bank noted. 

“The latest forecasts indicate that the overlapping shocks of the pandemic, the Russian invasion of Ukraine, and the sharp slowdown amid tight global financial conditions have dealt an enduring setback to development in EMDEs, one that will persist for the foreseeable future,” the World Bank said.

In more than a third of the poorest countries, per capita incomes in 2024 will still be below 2019 levels, the global financial institution added.

For advanced economies, 2023 will be one of the slowest growth years in five decades, news organisation Al Jazeera quoted Indermit Gill, chief economist of World Bank, as saying. 

The World Bank statement added: 

In advanced economies, growth is set to decelerate from 2.6 per cent in 2022 to 0.7 per cent this year and remain weak in 2024, the report said. After growing 1.1 per cent in 2023, the US economy is set to decelerate to 0.8 per cent in 2024, mainly because of the lingering impact of the sharp rise in interest rates over the past year and a half. In the euro area, growth is forecast to slow to 0.4 per cent in 2023 from 3.5 per cent in 2022, due to the lagged effect of monetary policy tightening and energy-price increases.

Spending pressures have increased in 14 low-income countries that are already in, or at high risk of, debt distress. 

Extreme climate events and conflict are more likely to tip households into distress in low-income countries than anywhere else because of limited social safety nets, the World Bank added.

Subscribe to Daily Newsletter :

SUPPORT US

We are a voice to you; you have been a support to us. Together we build journalism that is independent, credible and fearless. You can further help us by making a donation. This will mean a lot for our ability to bring you news, perspectives and analysis from the ground so that we can make change together.