According to World Bank president David Malpass, the global economy has a “dark prognosis”, as the pandemic’s aftershocks continue to hamper growth. Impoverished countries are at the greatest risk of facing such economic fallouts.
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World Economic Growth to fall to 4.1%, Widening Regional Disparities
Global growth will fall to 4.1 percent this year, down from 5.5 percent in 2021, according to the organization’s latest prediction. It ascribed the slowdown to virus threats, the phasing down of government funding, and the fading of an initial surge in demand. Mr. Malpass has also expressed concerns about rising global inequality. He addressed these in an interview with the BBC.
“The big drag is the inequality that’s built into the system,” he said. He further highlighted the risks faced by poorer countries. These countries are particularly exposed to the economic consequences of inflation-fighting efforts.
“The outlook for the weaker countries is still to fall further and further behind. That causes insecurity”, he stated.
Malpass blamed global inflation and widening economic gaps on stimulus programmes in the richest countries. The World Bank has made estimates of many countries like the USA boosting interest rates to counter price hikes. However, Mr. Malpass has warned, higher borrowing costs could hinder economic activity specifically in poorer economies.
Pandemic Aftershocks Threatening Growth
2021 saw some improvements in global economic growth rates. However, the Bank has projected diminishing progress this year. The Bank has attributed this to virus strains, and rapidly rising food and energy prices putting constraints on consumers. According to the research, global inflation is at its highest level since 2008.
Supply chain bottlenecks and the unwinding of stimulus programmes are additional dangers to economic growth, according to the bank. Due to the Omicron and Delta variants, the slowdown in the second half of 2021 was already larger than the Bank had anticipated in its June prediction.
China and the US Driving the Slowdown
China and the United States are mainly driving this global economic slowdown. In China, the economic growth rate may fall to 5.1 percent this year from 8% last year. On the other hand, the US might likely face a 3.7% growth rate compared to 5.6% in 2021. According to the World Bank, Eurozone growth will decline to 4.2 percent this year from last year’s 5.2 percent. India stands as hope for improvement, with a predicted growth rate of 8.7% this year from 2021’s 8.3%.
However, many emerging markets are still dealing with additional issues, such as poor immunization rates. For example, growth in Latin America and the Caribbean is predicted to drop to 2.6 percent in 2022, down from 6.7 percent last year.