World Bank predicts growth rates to fall to 4.1% this year

The World Bank said on Tuesday (local time) that the global economy’s growth rate for this year and next year will significantly deteriorate compared to last year, due to COVID, inflation risks, increased debt, widening income gap and higher interest rates at major economies. 　

According to the bank’s World Economic Outlook released on the same day, World Bank predicted that the global economic growth, which had been 5.5% last year, would fall to 4.1% this year. Growth rate for 2023 is expected to be even lower at 3.2%. 　

“Continued spread of the Omicron variant may bring growth forecasts down to 3.4%,” said Chief Economist and Director of the World Bank’s Prospects Group Ayhan Kose, adding that earlier and higher interest rates at the U.S. and other major economies would lower growth rates as well.

Chairman Jerome Powell of the Federal Reserve referred to inflation as a serious threat and would raise interest rates to respond to inflation-related threats. The Wall Street Journal reported that Powell’s remark reflect that the U.S economy no longer needs aggressive economic stimulus policies.


Jae-Dong Yu jarrett@donga.com