World Bank lowers projected growth rate
Revised Base Article
Buddy, check this out! The World Bank (WB) just adjusted its economic growth predictions for the current year, and it's not looking too hot. Due to ongoing trade tensions and global economic slowdown, their projection for 2020 hovers around 2.3% – that's a 0.4 percentage point decrease from the earlier estimate.
In its World Economic Prospects report, the WB also hinted at a potential weakest growth since the 1960s for the years ahead. Ouch! This outcome aligns with previous predictions from the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD), confirming the global economy's current slump.
"Looks like we're in for a bumpy ride without a course correction," warned Indermit Gill, the WB's chief economist, during an online media briefing. He's not kidding—the slowdown is particularly evident in major economies, with advanced countries getting hit hardest.
As for the US, the growth projection for this year has dropped nearly 1 percentage point compared to the start of the year, with the economy expected to expand at a mere 1.4%. In 2026, things might slightly pick up, reaching 1.6%. The same story goes for the eurozone, where growth is predicted at 0.7% this year and 0.8% in 2026.
As a result, developing countries are facing challenges, especially outside of Asia. "Growth in developing economies has been on the decline for decades now. At the same time, trade and investment growth have also faltered," explained Gill.
The situation is more concerning when you consider the astronomical debt levels these countries have lately taken on. For the upcoming years, average growth is expected to reach 3.8%, before edging up marginally to 3.9% in 2027. This outlook represents an average decrease of 1 percentage point compared to the 2010s, with inflation remaining higher than pre-COVID-19 levels.
China's growth is predicted at 4.5% this year, followed by a slowing in 2022 and 2023. India's economic growth, however, appears more resilient, with a forecast of 6.3% in 2025.
If global powers can successfully deescalate tensions and ease geopolitical uncertainties, the world economy could bounce back. The World Bank encourages developing countries to forge new trade partnerships to diversify their markets, alongside intraregional link development and ongoing improvements in business and state financial environments.
- The world's economic slowdown, as suggested by the World Bank, may have a significant impact on business sectors, potentially causing financial instability.
- Despite the projected growth decline in major economies like the US and the eurozone, emerging markets outside Asia, burdened with high debt levels, may struggle more in the upcoming years, resulting in challenges for their business and finance sectors.
