WORLD BANK / GLOBAL ECONOMIC FORECAST
10-Jan-2023
00:06:17
Global growth is slowing sharply in the face of elevated inflation, higher interest rates, reduced investment, and disruptions caused by Russia’s invasion of Ukraine, according to the World Bank’s latest Global Economic Prospects report. WORLD BANK GROUP
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STORY: WORLD BANK / GLOBAL ECONOMIC FORECAST
TRT: 6:17
SOURCE: WORLD BANK GROUP
RESTRICTIONS: NONE
LANGUAGE: ENGLISH / NATS
DATELINE: 9 JANUARY 2023, WASHINGTON DC / FILE
TRT: 6:17
SOURCE: WORLD BANK GROUP
RESTRICTIONS: NONE
LANGUAGE: ENGLISH / NATS
DATELINE: 9 JANUARY 2023, WASHINGTON DC / FILE
SHOTLIST
9 JANUARY 2023, WASHINGTON DC
1. Various shots, World Bank Group Headquarters
2. SOUNDBITE (English) Ayhan Kose, Chief Economist Equitable Growth, Finance, and Institutions (EFI) and Director of the Prospects Group, World Bank:
“Global economy is on a razor's edge. We are expecting a very sharp downturn this year. This was actually our downside scenario six months ago. It is now our baseline. Global growth will be around 1.7 per cent. This is the lowest growth rate outside of global recession since the early 1990s.”
FILE - DAKAR, SENEGAL
3. Various shots, shipping containers, cranes and freight carriers in a port in Dakar, Senegal
9 JANUARY 2023, WASHINGTON DC
4. SOUNDBITE (English) Ayhan Kose, Chief Economist Equitable Growth, Finance, and Institutions (EFI) and Director of the Prospects Group, World Bank:
“There are multiple reasons why we have the slowdown. Of course, we have been going through one of the sharpest interest rate cycle. Interest rates have been increasing around the world. You have significant volatility in food markets, in commodity markets. And then of course we have a major outbreak in China. China slowed quite considerably. So a confluence of factors driving the slowdown in the global economy.”
FILE – TANZANIA
5. Wide shot, Dar Es Salaam, Tanzania with skyscrapers and port
6. Various shots of a market in Dar Es Salaam, Tanzania
9 JANUARY 2023, WASHINGTON DC
7. SOUNDBITE (English) Ayhan Kose, Chief Economist Equitable Growth, Finance, and Institutions (EFI) and Director of the Prospects Group, World Bank:
“Because of the possibility of inflation remaining elevated. That could trigger financial stress in some emerging market developing economies, and that could also trigger a global recession. We have a major war in Europe still there. Geopolitical tensions could escalate. Food and energy insecurity could be a problem. Social tensions is another major risk, and of course covid outbreaks we cannot basically rule out. Beyond these, we should always keep in mind risk associated with climate change: the higher likelihood of natural disasters, as well as weaker growth outcomes--much weaker than what we are expecting. And there is this broader risk of fragmentation of global trade investment, financial networks.”
FILE – SENEGAL
8. Wide shot, wind Turbines in Taiba N’Diaye, Senegal
9. Various shots, shipping containers, cranes and freight carriers in a port in Dakar, Senegal
9 JANUARY 2023, WASHINGTON DC
10. SOUNDBITE (English) Ayhan Kose, Chief Economist Equitable Growth, Finance, and Institutions (EFI) and Director of the Prospects Group, World Bank:
“We need to consider one important risk, of course: further interest rate increases. Global recession risk is material. And in our calculations further increases in interest rates by major central banks could trigger a global recession in the sense that per capita global income might end up contracting. Soft landing is not our baseline, unless we see a significant decline in inflation in a very short time period global economy will go through a sharp downturn.”
FILE – TANZANIA
11. Various shots, a digital payment signs and applications in Dar Es Salaam, Tanzania
12. Wide shot, vendors along a city street in Dar Es Salaam, Tanzania
9 JANUARY 2023, WASHINGTON DC
13. SOUNDBITE (English) Ayhan Kose, Chief Economist Equitable Growth, Finance, and Institutions (EFI) and Director of the Prospects Group, World Bank:
“Without investment, we cannot generate sustained growth. Without investment, we cannot solve the climate change problem. Without investment, we cannot reduce inequality, we cannot reduce poverty. Investment is at the center of economic growth. Over the past decade, investment was slowing during the pandemic—investment contracted around 70 per cent of emerging market developing economies. And in the near future, we are expecting investment growth to remain subdued.”
FILE – SENEGAL
14. Wind Turbines in Taiba N’Diaye, Senegal
FILE – RWANDA
15. Various shots, water treatment plant near Kigali, Rwanda
9 JANUARY 2023, WASHINGTON DC
16. SOUNDBITE (English) Ayhan Kose, Chief Economist Equitable Growth, Finance, and Institutions (EFI) and Director of the Prospects Group, World Bank:
“Small states are quite vulnerable, and over the past three years after they contracted by about 11 per cent, they experienced very weak recovery. They're like canaries in the cold mine. They are telling us the type of impact of these multiple crisis having on developing economies and what might come next because of how climate change has been affecting these countries. Small states have difficult challenges. They are not diversified. They are basically relying on a small number of items for their revenues. Most of them rely on, for example incoming tourists. And during the global pandemic that tourism collapsed and then they contracted quite a bit.”
FILE – TANZANIA
17. Various shots, urban landscape of Dar Es Salaam, Tanzania
FILE – KENYA
18. Drone shot, rural community in Kilifi, Kenya
9 JANUARY 2023, WASHINGTON DC
19. SOUNDBITE (English) Ayhan Kose, Chief Economist Equitable Growth, Finance, and Institutions (EFI) and Director of the Prospects Group, World Bank:
“Countries need to basically make sure their house is in order. They have robust policy frameworks. They have clear medium term plans, and they are undertaking the type of reforms necessary to promote economic growth.”
20. Various shots, World Bank Group Building, Washington DC
1. Various shots, World Bank Group Headquarters
2. SOUNDBITE (English) Ayhan Kose, Chief Economist Equitable Growth, Finance, and Institutions (EFI) and Director of the Prospects Group, World Bank:
“Global economy is on a razor's edge. We are expecting a very sharp downturn this year. This was actually our downside scenario six months ago. It is now our baseline. Global growth will be around 1.7 per cent. This is the lowest growth rate outside of global recession since the early 1990s.”
FILE - DAKAR, SENEGAL
3. Various shots, shipping containers, cranes and freight carriers in a port in Dakar, Senegal
9 JANUARY 2023, WASHINGTON DC
4. SOUNDBITE (English) Ayhan Kose, Chief Economist Equitable Growth, Finance, and Institutions (EFI) and Director of the Prospects Group, World Bank:
“There are multiple reasons why we have the slowdown. Of course, we have been going through one of the sharpest interest rate cycle. Interest rates have been increasing around the world. You have significant volatility in food markets, in commodity markets. And then of course we have a major outbreak in China. China slowed quite considerably. So a confluence of factors driving the slowdown in the global economy.”
FILE – TANZANIA
5. Wide shot, Dar Es Salaam, Tanzania with skyscrapers and port
6. Various shots of a market in Dar Es Salaam, Tanzania
9 JANUARY 2023, WASHINGTON DC
7. SOUNDBITE (English) Ayhan Kose, Chief Economist Equitable Growth, Finance, and Institutions (EFI) and Director of the Prospects Group, World Bank:
“Because of the possibility of inflation remaining elevated. That could trigger financial stress in some emerging market developing economies, and that could also trigger a global recession. We have a major war in Europe still there. Geopolitical tensions could escalate. Food and energy insecurity could be a problem. Social tensions is another major risk, and of course covid outbreaks we cannot basically rule out. Beyond these, we should always keep in mind risk associated with climate change: the higher likelihood of natural disasters, as well as weaker growth outcomes--much weaker than what we are expecting. And there is this broader risk of fragmentation of global trade investment, financial networks.”
FILE – SENEGAL
8. Wide shot, wind Turbines in Taiba N’Diaye, Senegal
9. Various shots, shipping containers, cranes and freight carriers in a port in Dakar, Senegal
9 JANUARY 2023, WASHINGTON DC
10. SOUNDBITE (English) Ayhan Kose, Chief Economist Equitable Growth, Finance, and Institutions (EFI) and Director of the Prospects Group, World Bank:
“We need to consider one important risk, of course: further interest rate increases. Global recession risk is material. And in our calculations further increases in interest rates by major central banks could trigger a global recession in the sense that per capita global income might end up contracting. Soft landing is not our baseline, unless we see a significant decline in inflation in a very short time period global economy will go through a sharp downturn.”
FILE – TANZANIA
11. Various shots, a digital payment signs and applications in Dar Es Salaam, Tanzania
12. Wide shot, vendors along a city street in Dar Es Salaam, Tanzania
9 JANUARY 2023, WASHINGTON DC
13. SOUNDBITE (English) Ayhan Kose, Chief Economist Equitable Growth, Finance, and Institutions (EFI) and Director of the Prospects Group, World Bank:
“Without investment, we cannot generate sustained growth. Without investment, we cannot solve the climate change problem. Without investment, we cannot reduce inequality, we cannot reduce poverty. Investment is at the center of economic growth. Over the past decade, investment was slowing during the pandemic—investment contracted around 70 per cent of emerging market developing economies. And in the near future, we are expecting investment growth to remain subdued.”
FILE – SENEGAL
14. Wind Turbines in Taiba N’Diaye, Senegal
FILE – RWANDA
15. Various shots, water treatment plant near Kigali, Rwanda
9 JANUARY 2023, WASHINGTON DC
16. SOUNDBITE (English) Ayhan Kose, Chief Economist Equitable Growth, Finance, and Institutions (EFI) and Director of the Prospects Group, World Bank:
“Small states are quite vulnerable, and over the past three years after they contracted by about 11 per cent, they experienced very weak recovery. They're like canaries in the cold mine. They are telling us the type of impact of these multiple crisis having on developing economies and what might come next because of how climate change has been affecting these countries. Small states have difficult challenges. They are not diversified. They are basically relying on a small number of items for their revenues. Most of them rely on, for example incoming tourists. And during the global pandemic that tourism collapsed and then they contracted quite a bit.”
FILE – TANZANIA
17. Various shots, urban landscape of Dar Es Salaam, Tanzania
FILE – KENYA
18. Drone shot, rural community in Kilifi, Kenya
9 JANUARY 2023, WASHINGTON DC
19. SOUNDBITE (English) Ayhan Kose, Chief Economist Equitable Growth, Finance, and Institutions (EFI) and Director of the Prospects Group, World Bank:
“Countries need to basically make sure their house is in order. They have robust policy frameworks. They have clear medium term plans, and they are undertaking the type of reforms necessary to promote economic growth.”
20. Various shots, World Bank Group Building, Washington DC
STORYLINE
Global growth is slowing sharply in the face of elevated inflation, higher interest rates, reduced investment, and disruptions caused by Russia’s invasion of Ukraine, according to the World Bank’s latest Global Economic Prospects report.
Given fragile economic conditions, any new adverse development—such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic, or escalating geopolitical tensions—could push the global economy into recession. This would mark the first time in more than 80 years that two global recessions have occurred within the same decade.
The global economy is projected to grow by 1.7 per cent in 2023 and 2.7 per cent in 2024. The sharp downturn in growth is expected to be widespread, with forecasts in 2023 revised down for 95per cent of advanced economies and nearly 70 per cent of emerging market and developing economies.
Over the next two years, per-capita income growth in emerging market and developing economies is projected to average 2.8 per cent—a full percentage point lower than the 2010-2019 average. In Sub-Saharan Africa—which accounts for about 60 per cent of the world’s extreme poor—growth in per capita income over 2023-24 is expected to average just 1.2per cent, a rate that could cause poverty rates to rise, not fall.
“The crisis facing development is intensifying as the global growth outlook deteriorates,” said World Bank Group President David Malpass. “Emerging and developing countries are facing a multi-year period of slow growth driven by heavy debt burdens and weak investment as global capital is absorbed by advanced economies faced with extremely high government debt levels and rising interest rates. Weakness in growth and business investment will compound the already-devastating reversals in education, health, poverty, and infrastructure and the increasing demands from climate change.”
Growth in advanced economies is projected to slow from 2.5 per cent in 2022 to 0.5 per cent in 2023. Over the past two decades, slowdowns of this scale have foreshadowed a global recession. In the United States, growth is forecast to fall to 0.5 per cent in 2023—1.9 percentage points below previous forecasts and the weakest performance outside of official recessions since 1970. In 2023, euro-area growth is expected at zero percent—a downward revision of 1.9 percentage points. In China, growth is projected at 4.3 per cent in 2023—0.9 percentage point below previous forecasts.
Excluding China, growth in emerging market and developing economies is expected to decelerate from 3.8per cent in 2022 to 2.7 per cent in 2023, reflecting significantly weaker external demand compounded by high inflation, currency depreciation, tighter financing conditions, and other domestic headwinds.
By the end of 2024, GDP levels in emerging and developing economies will be roughly 6 per cent below levels expected before the pandemic. Although global inflation is expected to moderate, it will remain above pre-pandemic levels.
The report offers the first comprehensive assessment of the medium-term outlook for investment growth in emerging market and developing economies. Over the 2022-2024 period, gross investment in these economies is likely to grow by about 3.5 per cent on average—less than half the rate that prevailed in the previous two decades. The report lays out a menu of options for policy makers to accelerate investment growth.
“Subdued investment is a serious concern because it is associated with weak productivity and trade and dampens overall economic prospects. Without strong and sustained investment growth, it is simply impossible to make meaningful progress in achieving broader development and climate-related goals,” said Ayhan Kose, Director of the World Bank’s Prospects Group. “National policies to boost investment growth need to be tailored to country circumstances but they always start with establishing sound fiscal and monetary policy frameworks and undertaking comprehensive reforms in the investment climate.”
The report also sheds light on the dilemma of 37 small states—countries with a population of 1.5 million or less. These states suffered a sharper COVID-19 recession and a much weaker rebound than other economies, partly because of prolonged disruptions to tourism. In 2020, economic output in small states fell by more than 11per cent— seven times the decline in other emerging and developing economies. The report finds that small states often experience disaster-related losses that average roughly 5per cent of GDP per year. This creates severe obstacles to economic development.
Policymakers in small states can improve long-term growth prospects by bolstering resilience to climate change, fostering effective economic diversification, and improving government efficiency. The report calls upon the global community to assist small states by maintaining the flow of official assistance to support climate-change adaptation and help restore debt sustainability.
Given fragile economic conditions, any new adverse development—such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic, or escalating geopolitical tensions—could push the global economy into recession. This would mark the first time in more than 80 years that two global recessions have occurred within the same decade.
The global economy is projected to grow by 1.7 per cent in 2023 and 2.7 per cent in 2024. The sharp downturn in growth is expected to be widespread, with forecasts in 2023 revised down for 95per cent of advanced economies and nearly 70 per cent of emerging market and developing economies.
Over the next two years, per-capita income growth in emerging market and developing economies is projected to average 2.8 per cent—a full percentage point lower than the 2010-2019 average. In Sub-Saharan Africa—which accounts for about 60 per cent of the world’s extreme poor—growth in per capita income over 2023-24 is expected to average just 1.2per cent, a rate that could cause poverty rates to rise, not fall.
“The crisis facing development is intensifying as the global growth outlook deteriorates,” said World Bank Group President David Malpass. “Emerging and developing countries are facing a multi-year period of slow growth driven by heavy debt burdens and weak investment as global capital is absorbed by advanced economies faced with extremely high government debt levels and rising interest rates. Weakness in growth and business investment will compound the already-devastating reversals in education, health, poverty, and infrastructure and the increasing demands from climate change.”
Growth in advanced economies is projected to slow from 2.5 per cent in 2022 to 0.5 per cent in 2023. Over the past two decades, slowdowns of this scale have foreshadowed a global recession. In the United States, growth is forecast to fall to 0.5 per cent in 2023—1.9 percentage points below previous forecasts and the weakest performance outside of official recessions since 1970. In 2023, euro-area growth is expected at zero percent—a downward revision of 1.9 percentage points. In China, growth is projected at 4.3 per cent in 2023—0.9 percentage point below previous forecasts.
Excluding China, growth in emerging market and developing economies is expected to decelerate from 3.8per cent in 2022 to 2.7 per cent in 2023, reflecting significantly weaker external demand compounded by high inflation, currency depreciation, tighter financing conditions, and other domestic headwinds.
By the end of 2024, GDP levels in emerging and developing economies will be roughly 6 per cent below levels expected before the pandemic. Although global inflation is expected to moderate, it will remain above pre-pandemic levels.
The report offers the first comprehensive assessment of the medium-term outlook for investment growth in emerging market and developing economies. Over the 2022-2024 period, gross investment in these economies is likely to grow by about 3.5 per cent on average—less than half the rate that prevailed in the previous two decades. The report lays out a menu of options for policy makers to accelerate investment growth.
“Subdued investment is a serious concern because it is associated with weak productivity and trade and dampens overall economic prospects. Without strong and sustained investment growth, it is simply impossible to make meaningful progress in achieving broader development and climate-related goals,” said Ayhan Kose, Director of the World Bank’s Prospects Group. “National policies to boost investment growth need to be tailored to country circumstances but they always start with establishing sound fiscal and monetary policy frameworks and undertaking comprehensive reforms in the investment climate.”
The report also sheds light on the dilemma of 37 small states—countries with a population of 1.5 million or less. These states suffered a sharper COVID-19 recession and a much weaker rebound than other economies, partly because of prolonged disruptions to tourism. In 2020, economic output in small states fell by more than 11per cent— seven times the decline in other emerging and developing economies. The report finds that small states often experience disaster-related losses that average roughly 5per cent of GDP per year. This creates severe obstacles to economic development.
Policymakers in small states can improve long-term growth prospects by bolstering resilience to climate change, fostering effective economic diversification, and improving government efficiency. The report calls upon the global community to assist small states by maintaining the flow of official assistance to support climate-change adaptation and help restore debt sustainability.
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