Growth forecasts for the global economy have been sharply lowered thanks to “elevated inflation, higher interest rates, reduced investment, and disruptions caused by Russia’s invasion of Ukraine,” according to the World Bank’s latest Global Economic Prospects report.
“The global economy is projected to grow by 1.7% in 2023 and 2.7% in 2024. The sharp downturn in growth is expected to be widespread, with forecasts in 2023 revised down for 95% of advanced economies and nearly 70% of emerging market and developing economies.”
Big Correction. This is down from the 3% prediction just six months ago.
Advanced Economies. Growth in advanced economies is projected to slow from 2.5% in 2022 to 0.5% in 2023. In the United States, growth is forecast to fall to 0.5% in 2023—1.9 percentage points below previous forecasts and the weakest performance outside of official recessions since 1970.
- Emerging market and developing economies is expected to decelerate from 3.8% in 2022 to 2.7% in 2023.
Analysis. Ayhan Kose, Director of the World Bank’s Prospects Group, said its all about investment. “Subdued investment is a serious concern because it is associated with weak productivity and trade and dampens overall economic prospects. Without strong and sustained investment growth, it is simply impossible to make meaningful progress in achieving broader development and climate-related goals,”