World Bank downgrades 2023 global growth forecast to 1.7%

FILE: The World Bank Group headquarters building in Washington, D.C. (Photo By Shiny Things/Flickr, CC BY-NC 2.0)

WASHINGTON – Global economic growth is projected to slow to 1.7 percent in 2023, 1.3 percentage points below the forecast made in June last year, marking its third-weakest pace in nearly three decades, the World Bank Group said in its latest Global Economic Prospects released Tuesday.

Given such adverse shocks as high inflation, rising interest rates, sluggish investment and the Ukraine crisis, global growth has slowed “to the extent that the global economy is perilously close to falling into recession,” the report said.

The downgrade reflected “synchronous policy tightening aimed at containing very high inflation,” as well as deteriorating financial conditions, declining confidence and energy supply disruptions, it said.

Noting that the adjusted global growth forecast is overshadowed only by the 2009 and 2020 global recessions, the report said in 2024, the global economy is on track to grow by 2.7 percent.

More specifically, the report said growth for advanced economies is projected to slow to 0.5 percent in 2023, 1.7 percentage points below the June forecast.

US economic growth forecast for this year has been downgraded by 1.9 percentage points to 0.5 percent, the weakest performance outside of recessions since 1970. The Eurozone economy is projected to grow at 0 percent, down 1.9 percentage points from the previous forecast.

Meanwhile, the report said growth for emerging and developing economies is projected to slow to 3.4 percent in 2023, 0.8 percentage points below the June forecast.

It added that global trade volume will grow 1.6 percent this year, down 2.7 percentage points from the previous forecast.