World Bank sees major economies growing at much slower pace thanks to higher rates and banking stress
PUBLISHED TUE, JUN 6 202310:37 AM EDT
UPDATED TUE, JUN 6 202312:46 PM EDT
Hakyung Kim
KEY POINTS
- The institution said advanced economies — the U.S., Japan and euro area countries — are expected to grow by only 0.7% in 2023, down from 2.6% in 2022.
- The U.S. is projected to grow 1.1%, while the euro area and Japan are projected to see GDP growth of less than 1% in 2023.
Higher rates and overhangs from this year’s banking crisis will drastically slow economic growth for the biggest global economies, the World Bank said Tuesday.
The institution said advanced economies — the U.S., Japan and euro area countries — are expected to grow by only 0.7% in 2023, down from 2.6% in 2022.
The U.S. is projected to grow 1.1%, while the euro area and Japan are projected to see GDP growth of less than 1% in 2023. U.S. GDP growth is expected to decelerate in 2024 to 0.8% amid the higher rates.
The bank estimates overall global growth will decelerate to 2.1% in 2023, down from 3.1% last year. Emerging and developing economies are forecast to see a slight uptick in gross domestic product to 4%, up 0.6% from the bank’s projections made in January 2023. However, World Bank chief economist Indermit Gill said excluding China, growth in developing economies would be less than 3%.
This marks “one of the weakest growth rates in the last five decades,” Gill told reporters Tuesday.
Advertisement
______________________________________________________
The reduced forecasts for growth reflect broad-based downgrades stemming several overlapping shocks, most recent of which include spillover effects from the recent banking crisis seen in the U.S. and advanced economies. Increasingly restrictive credit conditions resulting from the banking turmoil have effectively shut out emerging and developing economies from global bond markets, putting them “in dangerous waters,” said the bank.
Fiscal weakness has dealt a further blow to low-income countries, 14 out of 28 of which are now in debt distress or at high risk of debt distress, according to the report. One-third of these countries are expected to see per capita incomes in 2024 remain at 2019 levels.
Nonetheless, central banks around the world continue raising rates to fight off persistent inflation.
“The world economy remains hobbled,” the bank said in the report. “Besieged by high inflation, tight global financial markets, and record debt levels, many countries are simply growing poorer.”
Source: CNBC
______________________________________________________
If you wish to contact the author of a post, you can send us an email at voyagesoflight@gmail.com and we’ll forward your request to the author (if available). If you have any questions about a post or the website, you may also forward your questions and concerns to the same email address.
______________________________________________________
All articles, videos, and images posted on Dinar Chronicles were submitted by readers and/or handpicked by the site itself for informational and/or entertainment purposes.
Dinar Chronicles is not a registered investment adviser, broker dealer, banker or currency dealer and as such, no information on the website should be construed as investment advice. We do not support, represent or guarantee the completeness, truthfulness, accuracy, or reliability of any content or communications posted on this site. Information posted on this site may or may not be fictitious. We do not intend to and are not providing financial, legal, tax, political or any other advice to readers of this website.
Copyright © Dinar Chronicles
