The World Bank has lowered its global economic growth forecast

The World Bank (WB) has lowered its economic growth forecasts for the US, Eurozone and China as the recovery is threatened by new covid strains, high levels of external debt and rising inequality, according to the organization, writes Reuters.

A new World Bank report says global growth is expected to slow "noticeably" from 5.5% last year to 4.1% in 2022 and 3.2% in 2023 as pent-up demand for goods and services are almost depleted, and governments are withdrawing from a new round of massive fiscal and monetary support, as at the beginning of the pandemic.

The current WB forecast is 0.2 percentage points lower than the figures that the organization expected back in June 2021.

The World Bank forecasts advanced economies growth to decline to 3.8% in 2022 and fall further to 2.3% in 2023, but notes that their output and investment will still return to pre-pandemic trends by the end of 2023. Growth in emerging market and developing economies will decline to 4.6% in 2022 and then to 4.4% in 2023, below the pre-pandemic trend.

For the Russian economy, the World Bank predicts growth of 2.4% (minus 0.8 percentage points) in 2022 and only 1.8% in 2023 (minus 0.5 percentage points) due to weakening domestic demand, tight monetary policy and the expected decline in commodity prices.

Ayaan Coase, author of the World Bank report, told Reuters that the rapid spread of the "omicron" indicates a continuing pandemic, and new outbreaks could overwhelm health systems and further reduce the global economic growth forecast by another 0.7 percentage point. “There is a clear slowdown (of economic growth. - The Bell). Political support is fading and there are many risks ahead of us,” Coase said.

According to him, additional risks are created by the increase in interest rates by world regulators. Especially at the World Bank, they are worried that regulators will move to tighten policy as early as this spring, several months ahead of previous expectations.