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Given the global economic conditions over the past few months, the expectations from the world economy to perform better in the near future seems quite low. Many prestigious international organizations have expressed concerns for the economic slowdown. The World Bank recently came up with the “Global Economic Prospects” highlighting multiple factors affecting the growth.
The World Bank’s report explains increasing inflation, interest rates, decreasing investments and all of this amidst the Russia-Ukraine war resulted in the potential slowing of global growth.
Clearly, the situation is already at the brink of becoming worse and could easily capitulate in case any major mishap occurs. The international financial institution also cited the possibility of the global economy pushed into recession given any new “adverse development.”
If inflation goes higher than expected, interest rates – used by central banks to control inflation – will be increased; the geopolitical situation getting worse; or the pandemic entering our lives again; any such incident could lead the already “fragile economic conditions” to get worse.
If inflationary pressures persist and economies are not able to combat an economic fallout in the near future, then it could result in the first instance in over 80 years when the world would witness “two major recessions” in the same decade.
The report consists of distinct estimates of economic growth across the world.
The pace of economic growth is different in developed and developing economies, as highlighted by the report. It noted that the advanced economies will witness growth approximately around a rate of 0.5% this year, relatively lower than last year’s 2.5%. On the other hand, the emerging nations are likely to see a 2.7% growth rate this year, down from 3.8% in 2022.
United States and European countries are expected to grow at a rate of around 0.5% and 0% respectively, down from their previous estimate of 1.9%. China is expected to grow at 4.9% in its economy with a fall of 0.9% from its preceding forecast.
The per capita income of developing countries is likely to increase by 2.8% on an average, which is lower than the average from 2010 to 2019. While the estimate for the Sub-Saharan region was 1.2%, which suggests the economy might head toward poverty.
Meanwhile, the growth rate for the global economy is expected to remain 1.7% in 2023 and 2.7% in 2024.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
