The World Bank anticipates major economies will grow at a much slower rate this year due to higher interest rates, rising prices, and banking stress.
According to a World Bank report released on Tuesday, the bank forecasts that advanced economies including the United States, Japan, and the Euro area will grow by only 0.7% in 2023, down from 2.6% in 2022, while real global GDP is expected to rise 2.1% this year, compared to 1.7% predicted in January, but still far below 2022 growth of 3.1%.
Growth in the US is expected to reach 1.1% in 2023, while growth in the Euro area and Japan will likely drop below 1%. In 2024, the growth rate of the U.S. economy is predicted to slow to 0.8% as high interest rates continue to dampen the economy.
Growth in emerging and developing economies is anticipated to rise to 4% in 2023, up from the 3.6% predicted in January. But if China is excluded, the World Bank’s chief economist Indermit Gill suggested that growth in emerging countries would be less than 3%.
This marks “one of the weakest growth rates in the last five decades,” Gill told reporters Tuesday.
Economic growth projections have been lowered broadly as a result of a number of interconnected shocks, the most recent of which is the ripple effect of the banking crisis in the US as well as other advanced economies. The bank warned that emerging and developing countries are “in dangerous waters” due to the tightening lending conditions caused by the banking turmoil.