Washington (EFE).- The World Bank increased its global growth forecast on Tuesday to 2.1 percent in 2023, four tenths more than its previous estimates, while it lowered its growth prospects for 2024 by three tenths, to 2.4%.
The agency warned, however, of the vulnerability of developing economies due to the effects of rate hikes to combat inflation.
Synchrony in the poor growth of the global economy
In its new global outlook report, the development bank made it clear that the resilience shown by most countries throughout 2022, when the global economy grew by 3.1% despite the energy crisis and the war in Ukraine, will fade away
“I fear this is another gloomy report as we expect last year’s sharp and synchronized slowdown to continue into this year,” the bank’s chief economist Indermit Gill said in a media call, noting that the poor growth will be synchronized. because two out of three economies will have a lower growth rate this year than last year.
By 2024, the agency projects that the global economy will pick up some pace again and will grow by 2.4%, three tenths less than previously expected.
In addition, he expects the growth effects of rate hikes to peak this year, although banking instability will continue to weigh on credit.
Limited progress in Latin America despite recovery in raw materials
Regarding Latin America and the Caribbean, the projections of the World Bank indicate that the region will grow just 1.5% this year, two tenths more than previously estimated, although the group highlights that so far in 2023 the confidence of the consumers have been clearing up and the prices of raw materials have partly recovered.
Among the main economies of the region, Mexico stands out, which will grow by 2.5% this year (although it will slow down to 1.9% in 2024) and Brazil, which will maintain very modest figures for the two years (1.2% in 2023 and 1.4% in 2024).
They will suffer a contraction, however, Argentina (of 2%), weighed down by the severe drought that has affected its agricultural production, and Chile, which will contract by 0.8%. Both economies will recover in 2024 and register growth of 2.3% and 1.8%, respectively.
The report places special emphasis on the extremely vulnerable situation of low-income countries, where fiscal conditions have worsened over the last decade.
Among the main problems of these economies is the increase in public debt, the increasingly high risk of default and the devastating effects of the climate crisis.
In addition, the organization analyzes the consequences of the restrictive monetary policy of the United States in the emerging economies, and concludes that it is associated with negative effects and could even contribute to the emergence of a financial crisis in some countries.