The bank said in its annual global economic report that after recovering sharply in 2021 from the depths of the pandemic, the global economy grew by 3 percent in 2022, falling to a rate of 2.6 percent last year, and is expected to record tepid growth of 2.4 percent. this year. Outlook report. These rates lag behind the average of 3.1 percent during the 2000s.
The continued slowdown ensures that world leaders will fail to achieve the 2030 development goals agreed upon by 193 members of the United Nations, including the United States, in 2015. Governments have pledged to transform the global economy by the end of this decade by setting 17 ambitious goals, including That is eliminating extreme poverty, cutting greenhouse gas emissions by almost half, promoting education for the poor, and eliminating hunger.
The measures were not legally binding. But the result of three years of negotiations, presented at the United Nations with a speech from Pope Francis, was seen as a moral blow.
The 2020s so far have been a time of broken promises. “Governments around the world have failed to meet the ‘unprecedented’ targets they promised to achieve by 2020,” Gill wrote in the introduction to the report, which called the outlook “miserable.”
The bank said that people in a quarter of the world’s developing countries are poorer today than they were before the pandemic.
“When you look at the big picture, it is unpleasant,” said Ayhan Kos, deputy chief economist at the bank.
However, the bank celebrated progress in controlling inflation, as kinks in the supply chain were worked out and higher borrowing costs cooled business activity. Globally, inflation is expected to average 3.7 percent this year, down from 5.3 percent in 2023.
But prices are likely to continue rising faster than central banks, such as the Federal Reserve, say is advisable through this year.
“I suggest we don’t drink champagne yet,” said Coss.
The bank’s forecast calls for the United States to grow at a rate of 1.6 percent this year, nearly twice as fast as Europe or Japan. China is expected to grow by 4.5 percent, down from 5.2 percent last year, as the post-Covid-19 reopening of the economy fades.
In the long run, slowing growth is a problem for advanced economies and middle-income countries alike. One reason for the latter’s anemic growth is the sharp decline in investment spending, which is barely half the average rate seen in the past two decades.
By implementing policy changes such as expanding trade and capital flows and government budget discipline, developing countries can fuel an investment boom, the bank said, citing historical examples. In 192 episodes since 1950, countries such as Chile, Colombia and Turkey have increased their annual economic growth rates by about a third thanks to sharply higher spending on new plants and equipment.
The report said that in such periods, developing countries expanded their economies by about 40 percent over six years.
While bank economists expect a good but not great year, they cautioned that conditions are more likely to disappoint than produce a positive surprise. The war in Gaza – along with ongoing hostilities in Ukraine – could devastate global growth. It is possible that the escalation of fighting in the Middle East will lead to oil prices rising to levels much higher than their current level ($75 per barrel), which would weaken growth and raise inflation rates.
Attacks on ships across the Red Sea have prompted cargo ships to take the longer and more expensive route around the southern tip of Africa. Over the 10 days ending on January 2, trade volume through the Suez Canal, which connects the Red Sea to the Mediterranean, fell by 28%, according to the International Monetary Fund.
Disruption of this key sea lane, if it continues, could put upward pressure on prices in the United States and elsewhere.