World Bank sees sharp world growth slowdown, 'hard landing' risk for poorer nations

WASHINGTON : The World Bank on Tuesday cut its forecasts for economic growth in the United States, the Euro area and China and warned that high debt levels, rising income inequality and new COVID-19 variants threatened the recovery in developing economies.

The bank's latest semi-annual forecast cited a big rebound in economic activity in advanced and developing economies in 2021 after contractions in 2020, but warned that longer-lasting inflation, ongoing supply chain and labor force issues, and new COVID-19 variants were likely to dampen growth worldwide.

COVID-19 has caused nearly 300 million reported infections https://graphics.reuters.com/world-coronavirus-tracker-and-maps worldwide and over 5.8 million deaths, according to data compiled by Reuters. While 59per cent of the world's population has received at least one dose of a COVID-19 vaccine https://ourworldindata.org/covid-vaccinations, only 8.9per cent of people in low-income countries have received at least one dose, according to the Our World in Data website.

The report forecast growth in advanced economies declining to 3.8per cent in 2022 from 5per cent in 2021, and dropping further to 2.3per cent in 2023, but said their output and investment would still return to their pre-pandemic trend by 2023. Growth in emerging and developing economies is expected to drop to 4.6per cent in 2022 from 6.3per cent in 2021, edging lower to 4.4per cent in 2023, which means their output would remain 4per cent below the pre-pandemic trend.

Rising interest rates posed additional risks, and could further undermine the growth forecasts, especially if the United States and other large economies begin jacking up rates this spring, months earlier than expected, Kose said.

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