Number theory: Will global growth winter outlast this winter season?

Updated on Jan 13, 2023 01:51 PM IST

The World Bank expects global GDP growth to plummet to 1.7% in 2023 after a tepid 2.9% in 2022. While the situation is expected to improve in 2024, global growth will still be just 2.7%.

 The latest World Bank report has a made a downward revision of 1.3 percentage points and 0.3 percentage points to its growth forecasts for 2023 and 2024 compared to June 2022. (REUTERS/Johannes P. Christo/File Photo) PREMIUM
The latest World Bank report has a made a downward revision of 1.3 percentage points and 0.3 percentage points to its growth forecasts for 2023 and 2024 compared to June 2022. (REUTERS/Johannes P. Christo/File Photo)
By, New Delhi

The World Bank released its latest edition of Global Economic Prospects on January 10. The report is unequivocal in its prognosis of the global economic situation. “The crisis facing development is intensifying,” wrote David Malpass, President of the World Bank Group, in his foreword to the report. Here are six charts from the report that explain the situation in the global economy.

2023 will be among the worst years for global growth

The World Bank expects global GDP growth to plummet to 1.7% in 2023 after a tepid 2.9% in 2022. While the situation is expected to improve in 2024, global growth will still be just 2.7%. The latest report has a made a downward revision of 1.3 percentage points and 0.3 percentage points to its growth forecasts for 2023 and 2024 compared to June 2022. The 1.7% world GDP growth for 2023 is the lowest since 1991 if one were to exclude two contraction years of 2020 (pandemic) and 2009 (global financial crisis).

As is the case with most economic downturns, the current one is likely to have a worse impact on the already disadvantaged. This holds for both the inter- and intra-country impact of the current slowdown. The report shows that while the pandemic and subsequent economic events have derailed the pre-pandemic growth trajectory in many rich and non-rich countries, the latter have suffered a bigger setback. The other alarming statistic in the report is that even within Emerging Market and Developing Economies (EDMEs) per capita income is expected to grow at a slower pace in high-poverty countries than in low-poverty ones.

Perhaps the only upside to the current economic situation is that commodity prices have come down compared to the 2022 peaks in the aftermath of the war in Europe. While this has brought some relief, especially to energy and food importers (most of which are low-income countries) and prevented an increase in long-term inflation expectations, short-term inflation expectations continue to be higher than pre-pandemic levels. With many factors such as the fate of the ongoing war in Europe and the economic impact of China rolling back its zero-Covid policy still in the realm of the unknown, the global economy will continue to be vulnerable to inflationary fears if not outright pressure.

The report highlights one alarming factor that is the result of long-term climate crisis rather than the economic effect of post-pandemic events. The number of extreme weather events in EMDEs during 2007-2021 increased by 36% compared to the previous 14-year period from 1992-2006. An increase in extreme weather events also means rising volatility for food production. This is bound to translate into an increase in future volatility in food inflation with especially adverse consequences for some of the poorest countries.

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  • ABOUT THE AUTHOR

    Roshan Kishore is the Data and Political Economy Editor at Hindustan Times. His weekly column for HT Premium Terms of Trade appears every Friday.

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