The World Bank has downgraded all of its forecasts for advanced economies in the world. It cut its growth outlook for the global economy to 1.7 percent for 2023. This, it has claimed in its latest report on Global Economic Prospects. However, earlier, the organization projected the world economy to expand by 3 percent in 2023.
The adjustment was led by a downgrade to its prospects for the U.S. economy. And it is now forecasting 0.5% growth. This is highly different from an earlier projection of 2.4%. The World Bank has cut its growth outlook for China for 2023. The reading says it is from 5.2% to 4.3%, and for Japan, it is from 1.3% to 1%. Similarly, for Europe and Central Asia, it is from 1.5% to 0.1%.
What The World Bank Has Said
The World Bank said that global growth has slowed to the extent that the global economy is very close to falling into recession. And the circumstances are attributed to an unexpectedly rapid synchronous global monetary policy, which is tightening behind the sluggish growth.
So, the World Bank’s downgraded estimates mark the 3rd weakest pace of growth in three decades. And global recessions have overshadowed it. And it is the pandemic and also the global financial crisis that is the root cause.
The World Bank further said that tighter monetary policies from central banks around the world were necessary to control inflation. Consequently, all of these have contributed to the worsening global financial conditions.
The World bank further said that the United States, Europe, and China are undergoing a period of pronounced economic weakness. And it is resulting in spillovers exacerbating several headwinds in the market and developing economies.
Economic Study On China
The World Bank said in its report that China’s reopening poses great uncertainty for the country’s economic recovery. The report said that the economic recovery in China might appear delayed. This is more true if reopening results in major outbreaks that provide pressure on the health sector. Now, it is questionable and uncertain about the trajectory of the pandemic in China. So, it is equally unsure how businesses, households, and policymakers in China will respond.
The World Bank President, David Malpass, said on CNBC on Tuesday:
“China is a key variable and there may be an upside for China if they push through Covid as quickly as they seem to be doing.”