By WASHINGTON. Jan 10 (Interfax-Ukraine) – The World Bank has sharply worsened its forecast for global economic growth in 2023 amid persistently high inflation.
According to the new World Bank forecast, global GDP will increase by 1.7% in 2023. In June 2022, a 3% rise was forecast.
"This pace of growth would be the third weakest in nearly three decades, overshadowed only by the global recessions caused by the pandemic in 2020 and the global financial crisis in 2009," the World Bank said in the Global Economic Prospects report. "This forecast is largely reflecting more aggressive monetary policy tightening, deteriorating financial conditions, and declining confidence."
Growth in investment in developing countries is expected to be below the average of the past two decades this year. Further shocks could lead the global economy to a new recession, the bank said.
Small states are especially vulnerable to potential shocks given their dependence on foreign trade and financing, weak economic diversification, and high debt, the organization’s experts said.
The U.S.’s GDP, according to the World Bank forecast, will increase by 0.5% in 2023, while the volume of the euro area economy will not change compared to 2022. The June forecasts of the WB assumed that the U.S.’s GDP growth this year would be 2.4%, the euro area by 1.9%.
The forecast for the growth of the Chinese economy for the current year is lowered by 0.9 percentage points, compared with June, to 4.3%.
The Russian economy will shrink by 3.3% in 2023 after falling by 3.5% in 2022, the World Bank said.
In June 2022, the World Bank expected a decline in Russian GDP by 2% in 2023, but in October revised its forecast for the Russian economy for the worse, to 3.6% less. Thus, the January forecast for Russia has been improved.
