World Bank: sharp, prolonged slowdown to hit developing countries hard

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Global growth continues to slow sharply due to rising inflation and interest rates, reduced investment and supply disruptions following the large-scale Russian invasion of Ukraine.

Any new adverse development could push the global economy further into recession, according to the World Bank. This includes higher than expected inflation rates, abrupt interest rate hikes to contain them, a resurgence of the COVID-19 pandemic or escalating geopolitical tensions.

But despite extremely high government debt and rising interest rates, advanced economies worldwide are absorbing capital.

Poverty rates are rising

However, per capita income growth in emerging markets and emerging economies is expected to average 2.8 percenta full percentage point lower than the 2010-2019 average.

In Sub-Saharan Africa, accounting for approx 60 percent of the world’s extremely poorgrowth in per capita income is expected to average just 1.2 percent in 2023-2024, a rate that could cause poverty rates to rise rather than fall.

“The The crisis facing development is intensifying as the outlook for global growth worsenssaid World Bank Group Chairman David Malpass.

“Emerging and developing countries are facing a multi-year period of slow growth due to high debt levels and weak corporate investment. This will exacerbate already devastating reversals in education, health, poverty and infrastructure and the increasing demands of climate change.”

Global recession predicted

The report projects that growth in advanced economies slows from 2.5 percent in 2022 to 0.5 percent in 2023. For the past two decades, slowdowns of this magnitude have presaged a global recession.

In the United Statesgrowth this year is expected to fall to 0.5 percent -1.9 percentage points below previous forecasts and the weakest performance outside of official recessions since 1970.

2023, Zero percent growth is expected for the eurozone – a downward revision of 1.9 percentage points. In China, growth is estimated at 4.3 percent; 0.9 percentage point lower than previous forecasts.

Excluding China, growth in emerging markets and emerging economies is expected to pick up to slow down from 3.8 percent in 2022 to 2.7 percent in 2023.

By the end of 2024, GDP levels in emerging and developing economies will be roughly six percent below the expected level before the pandemic.

Over the period 2022-2024, gross investment in these economies is likely to grow by an average of about 3.5 percent – less than half the rate of the previous two decades.

UNDP/Pierre Michel Jean

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Latin America and the Caribbean

Meanwhile, figures from the United Nations’ latest flagship annual report on goods exports from Latin America and the Caribbean show a 20 percent increase in 2022, but a decline in growth from the previous year.

The Economic Commission for Latin America and the Caribbean (ECLAC) estimates that growth was driven by a 14 percent increase in prices and a 6 percent expansion of export volumes.

The Commission also found that the value of imports of regional goods increased by 24 percent.

As in 2021, the expansion was mainly driven by external factors (the rise in commodity prices, especially fuel), and not by the ability to increase export volumes or diversify regional export offerings into new sectors.



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