World Bank warns of "grim outlook" for global economy
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The World Bank president David Malpass warned of "grim outlook" for global economy in the wake of the ongoing pandemic.
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Covid and shutdowns are still taking a major toll on people in poorer countries
While the pandemic continues to hinder economic growth globally, World Bank President David Malpass has warned of a "grim outlook."
According to the organization's most recent prediction, global growth would decrease to 4.1 percent this year, down from 5.5 percent in 2021.
It ascribed the slowdown to virus risks, the tapering down of government help, and the fading of an initial rise in demand.
Malpass, on the other hand, expressed concern about growing global inequality. He told the BBC that the "big drag is the inequality that's built into the system," stressing that poorer nations were more vulnerable to economic loss from efforts to combat inflation.
"The outlook for the weaker countries is still to fall further and further behind. That causes insecurity."
According to the bank, by 2023, economic activity in all advanced economies, including the US, the European Union, and Japan, will have recovered from the pandemic's impact, as opposed to poor and emerging nations' output anticipated to remain 4 percent lower than before Covid.
The richest nations' stimulus programs were criticized by Malpass for widening the gap by fuelling global inflation, warning that increased borrowing costs might harm economic activity, particularly in poorer economies.
"The problem with rate hikes is it hurts people that need floating rate money... and that's usually new businesses, women-owned businesses, developing country businesses," Malpass said.
Separately, the World Economic Forum (WEF) cautioned that different economic recoveries were making it more difficult to engage on global issues like climate change.
In its annual global risks report on Tuesday, the WEF said "Widening disparities within and between countries will not only make it more difficult to control COVID-19 and its variants but will also risk stalling, if not reversing, joint action against shared threats that the world cannot afford to overlook."
Highest post-recession recovery in 80 years
According to the World Bank's Global Economic Prospects study, the global economy recovered from the pandemic in 2021 with the highest post-recession recovery in 80 years.
However, increases are projected to halt this year as a result of viral variations and quickly rising prices for commodities such as food and energy. According to the research, global inflation is at its highest level since 2008.
The bank also warned of the risks presented by supply chain bottlenecks and the tapering down of stimulus programs.
Because of the expansion of variants Omicron and Delta, the slowdown in the second half of 2021 was already bigger than the bank had predicted. It anticipates a "severe downturn" this year and predicts that global growth would decrease even further in 2023, to 3.2 percent.
"The reality is that Covid and the shutdowns are still taking a huge toll and that's especially true on people in poorer countries," Malpass said. "Just a grim outlook."
The global slowdown is being driven by the US, whose growth is expected to increase by 3.7 percent this year compared to 5.6 percent in 2021, and China, with its growth anticipated to be set at 5.1 percent this year compared to 8 percent last year.
The eurozone's expansion will decelerate to 4.2 percent this year, down from 5.2 percent last year, according to the bank.
However, many emerging economies continue to face additional hurdles, such as poor immunization rates. Growth in Latin America and the Caribbean, for example, is predicted to decline to 2.6 percent in 2022, down from 6.7 percent last year.
