WB raises growth outlook this year, cuts 2024 forecast

In its Global Economic Prospects report released on June 6, the World Bank (WB) forecast that the world economy will grow 2.1% in 2023, higher than the 1.7% forecast in January. However, this figure is still lower than the 3.1% growth rate last year, according to Reuters.

World Bank logo at a conference in Indonesia

This year's outlook has been lifted as major economies have proven more resilient than expected despite rising borrowing costs, the World Bank said.

The US added 339,000 jobs in May, more than expected, despite the Federal Reserve raising its benchmark interest rate 10 times in the past 15 months. The World Bank raised its forecast for US growth this year to 1.1%, still weak but much higher than its January forecast of 0.5%. China is expected to grow 5.6% this year, up from its January forecast of 4.5%.

On the other hand, according to this semi-annual report, growth in 2024 is 2.4%, weaker than the forecast of 2.7% in the January assessment. The reason is due to the lagged effects of central banks' monetary tightening policies and increased credit conditions, which have weakened investment.

The World Bank believes that the world economy is likely to slow down significantly this year due to the impact of high interest rates, prolonged inflation, the banking crisis, the war in Ukraine and the Covid-19 pandemic.

Indermit Gill, chief economist and vice president of the World Bank, called the report bleak and predicted that last year's synchronous slowdown would continue this year.

Advanced economies are forecast to grow just 0.7%, down sharply from 2.6% in 2022. That would be one of the group's weakest growth rates in five decades.

Mr. Gill said two-thirds of developing economies will grow lower than in 2022, severely affecting efforts to recover from the pandemic and reduce poverty, increasing the public debt crisis.

“By the end of next year, one-third of developing countries will not have reached the per capita income levels they had at the end of 2019,” Gill predicted.

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