WASHINGTON ( Associated Press) – The World Bank is downgrading its outlook for the global economy, blaming the continued outbreak of COVID-19, lack of government economic aid and ongoing disruptions in global supply chains.
The 189-country, anti-poverty agency has forecast worldwide economic growth of 4.1% this year, up from 4.3% last June. This is also well below the 5.5% expansion the global economy is projected to lengthen in 2021.
In its Global Economic Prospects report on Tuesday, the World Bank forecast that the US economy will grow by 3.7% this year, up from 5.6% in 2021. It expects China, the world’s second largest economy, to see a 5.1% drop in growth. 2022 from 8% last year.
The 19 European countries sharing the euro currency are collectively expected to grow at 4.2% this year, down from 5.2% in 2021. And Japan is projected to register 2.9% growth in 2022, up from 1.7% last year.
Emerging and developing economies are collectively projected to grow at 4.6 per cent this year, up from 6.3 per cent in 2021.
The arrival of COVID-19 in early 2020 slowed global economic output. The world economy shrank by 3.4% in 2020. Huge relief provided by governments and engineered super-low interest rates by central banks – and eventually the rollout of vaccines – triggered an unexpectedly strong recovery last year.
But the pace of the rebound caught businesses by surprise. They have scrambled to find raw materials and supplies to meet customer demand and ships, trains and trucks to transport them. Particularly in the United States, they have struggled to find workers to fill job opportunities.
One result has been the highest global inflation rate since 2008. Central banks are now reducing their support for economic growth and considering raising interest rates to counter higher prices.
“The world economy simultaneously faces COVID-19, inflation and policy uncertainty, with government spending and monetary policies in unknown territory,” said World Bank President David Malpass.