In 2023, global growth will fall to 1.7%, against a rate of 3% forecast six months ago by the World Bank, according to the latest World Economic Outlook published by the institution. Growth is stalling sharply due to inflation, rising interest rates, lower investment, and disruptions caused by Russia’s invasion of Ukraine, it says in this document.
Given the precarious economic situation, any new adverse developments — such as higher-than-expected inflation, a sharp rise in interest rates to contain it, a resurgence of the COVID-19 pandemic, or an escalation of geopolitical tensions — could push the global economy into recession. It would be the first time in over 80 years that two global recessions have occurred in the same decade.
Growth in the global economy is expected to be 1.7% in 2023, then 2.7% in 2024. “A marked and overall slowdown is anticipated, with forecasts revised downwards for 95% of advanced economies and nearly 70% of emerging market and developing economies.
Over the next two years, per capita income growth in these economies is expected to average 2.8%, ie one percentage point less than the average recorded over the period 2010-2019. In sub-Saharan Africa, which is home to around 60% of the people living in extreme poverty in the world, the increase in per capita income for the years 2023-2024 is expected to be only 1.2% on average, which risks leading to an increase in poverty.
Morocco: Growth prospects revised downwards
The World Bank expects GDP to land up 1.2% in 2022, up 0.1% from last June’s forecast. But for 2023, the World Bank is revising its growth forecasts significantly downwards and announcing 3.5%, down 0.8% from last summer’s forecasts.
“Growth in Morocco is expected to accelerate to 3.5% in 2023—lower than previous projections—
and 3.7% in 2024 as its agricultural sector gradually recovers from last year’s drought. should partially offset weak private consumption impacted by high inflation,” the report reads.
An alarming discourse on emerging countries
“The development crisis is deepening as global growth prospects deteriorate,” said World Bank Group President David Malpass. Emerging and developing economies have been experiencing sluggish growth for several years due to high indebtedness and insufficient investment, as global capital is absorbed by advanced economies facing extremely high levels of public debt and interest rates. rising interest. Weak growth and business investment will compound already devastating setbacks in education, health, poverty reduction, and infrastructure, as well as the necessities of climate change”.
Growth in advanced economies is expected to fall from 2.5% in 2022 to 0.5% in 2023. Over the past two decades, slowdowns of this magnitude were the harbingers of a global recession. In the United States, growth is expected to fall to 0.5% in 2023; this rate, 1.9 percentage points lower than previous forecasts, will be the weakest performance recorded by this country since 1970, apart from the official episodes of recession. In 2023, growth in the euro area is expected to be zero, which corresponds to a downward revision of 1.9 percentage points. China, meanwhile, is expected to grow by 4.3% in 2023, 0.9 points less than previous forecasts.
Excluding China, growth in emerging markets and developing economies is expected to slow from 3.8% in 2022 to 2.7% in 2023, due to significantly weaker external demand combined with high inflation, depreciation monetary conditions, tighter financing conditions, and other domestic difficulties.
By the end of 2024, GDP levels in emerging and developing economies will remain around 6% lower than pre-pandemic forecasts. Furthermore, while global inflation is likely to moderate, it will remain above pre-COVID levels.
The report further provides the first comprehensive assessment of the medium-term outlook for investment growth in emerging markets and developing economies. Over the period 2022-2024, gross investment in these countries is expected to grow by around 3.5% on average, less than half the rates seen over the previous two decades. The report also suggests options for policymakers to accelerate investment growth.
“The low level of investment is very worrying because it is accompanied by a low level of productivity and trade and it darkens the overall economic outlook. Without strong and sustained growth in investment, it is simply impossible to make significant progress in achieving development and climate change goals, says Ayhan Kose, director of the World Bank’s Perspectives Unit. Policies to stimulate investment must be tailored to national circumstances, but always start with putting in place sound fiscal and monetary frameworks and implementing comprehensive investment climate reforms”.
The report also highlights the specific difficulties of 37 small states, countries with a population of 1.5 million or less that have experienced a steeper slowdown and a much more limited rebound than other economies after the pandemic, partly because of prolonged disruptions to tourism. In 2020, economic output in small states fell by more than 11%, seven times more than in other emerging and developing economies. The report finds that these countries often experience disaster-related losses that average around 5% of GDP per year, posing a serious impediment to their economic development.
Their politicians can improve long-term growth prospects by building resilience to climate change, encouraging genuine economic diversification, and improving the efficiency of public administrations. The report calls on the international community to help small states by maintaining the official aid flows needed to support adaptation to climate change and help restore debt sustainability.
