The World Bank (WB) has significantly lowered its global economic growth outlook for this year. Inflation, interest rate hikes, decreased investment, Russia’s invasion of Ukraine, and China’s quarantine policy confusion were cited as threats to global economic growth.
The World Bank predicted in its global economic outlook released on the 10th (local time) that the global economy will grow only 1.7 percent this year. This is 1.3 percentage points higher than the 2023 forecast (3.0%) in the June last year report. It is the lowest growth rate in the past 30 years, except for 2009 and 2020 when the economy suffered an economic recession. The World Bank warned that a slowdown in growth at this level over the past two decades has led to a global recession.
The World Bank cited the worsening financial environment as major advanced economies simultaneously implemented austerity measures to curb high prices as the reason for lowering their growth outlook. It also explained that economic uncertainties continue, including rising energy prices following Russia’s invasion of Ukraine and confusion caused by changes in China’s quarantine policy.
The World Bank lowered its growth outlook for 95 percent of advanced economies and nearly 70 percent of emerging and developing economies.
In particular, the economic growth rate of developed countries is expected to slow from 2.5 percent last year to 0.5 percent this year. The U.S. forecast for this year was lowered to 0.5%, 1.9 percentage points lower than the previous forecast (2.4 percent). Excluding the economic recession of the 1970s, it is expected to record the slowest growth rate. For the eurozone, it is also predicted that it will reach the 0% range by lowering its forecast by 1.9 percentage points.
China, which recorded 2.7 percent growth last year, is expected to grow 4.3 percent this year as the economy recovers somewhat. However, the expectation was lowered by 0.9 percentage points from the 2023 forecast (5.2%) of the report in June last year. This is a forecast that reflects the spread of COVID-19 and weakening external demand.
The growth rate of emerging economies and developing countries excluding China is expected to slow from 3.8% last year to 2.7% this year. This is because high prices, depreciation of the currency, worsening funding environment, and other unfavorable conditions within each country are worsening the situation.
The World Bank forecast global economic growth to be 2.7 percent in 2024. The outlook for Korea was not mentioned in the report.
“While emerging economies and developing countries have faced years of low growth due to huge debt burdens and weak investment, developed countries are sucking up global capital in the face of very high levels of national debt and interest rate hikes,” World Bank President David Malpass said.