The growth of emerging markets and developing countries will be severely impacted during the next two years, according to the World Bank’s most recent Global Economic Prospects study.
The assessment released on Tuesday, stated that any future unfavorable events could deepen the current recession.
The growth in per capita income over the years 2023 to 2024 is predicted to average just 1.2% in sub-Saharan Africa, which is home to about 60% of the world’s extreme poor. At this rate, poverty rates may rise rather than decline.
The development issue is getting worse as forecast for global growth gets worse.
Heavy debt loads and limited corporate investment have led to a multi-year period of poor growth for emerging and developing countries, according to World Bank President David Malpass.
Due to escalating inflation and interest rates, declining investment, and supply interruptions brought on by Russia’s full-fledged invasion of Ukraine, growth continues to weaken dramatically on a global scale.
The resurgence of COVID-19 epidemic, abrupt increases in interest rates to contain it, higher-than-anticipated inflation rates, and rising geopolitical tensions are a few examples.
Yet industrialized nations are absorbing global capital despite having exceptionally high levels of public debt and rising interest rates, it claimed.
According to the paper, “per-capita income growth in emerging market and developing nations is predicted to average 2.8%, a full percentage point lower than the average for the period of 2010–2019.”
According to the analysis, growth in advanced economies will decrease from 2.5% in 2022 to 0.5% in 2023. Slowdowns of this size have preceded a worldwide recession over the past 20 years.
The United States’ GDP is anticipated to slow to 0.5% this year, which is 1.9 percentage points below earlier projections and the lowest performance since 1970.
The forecast for growth in the Eurozone for 2023 has been revised downward by 1.9 percentage points to zero percent. Growth in China is predicted to reach 4.3%, which is 0.9 percentage points less than earlier projections.
With China excluded, it is anticipated that growth in emerging markets and developing economies will slow from 3.8% in 2022 to 2.7% in 2023.
The GDP levels in emerging and developing economies will be about 6% below what was anticipated before the epidemic by the end of 2024.
Gross investment in these economies is anticipated to expand by roughly 3.5% on average between 2022 and 2024, which is less than half the rate of the previous two decades.
Statistics from the most recent edition of the UN’s main annual report on exports of goods from Latin America and the Caribbean indicate a 20% increase in 2022 but a decline in growth from the year before.
According to the Economic Commission for Latin America and the Caribbean (ECLAC), a 14% increase in pricing and a 6% increase in export volumes were the main drivers of the growth.
The panel also discovered a 24% value rise in regional products imports.
Similar to 2021, the growth was primarily influenced by outside causes (the increase in the price of raw materials, particularly fuel), rather than the ability to boost export volumes or diversify the regional export supply toward new industries.