The World Bank warned on Tuesday that the spread of Omicron and other new coronavirus variants threatens to lead to more income inequality in its projected global economic slowdown, especially in developing countries.
In its latest half-yearly forecast, the bank cut its forecast for global economic growth by 0.2% from estimates released in June.
The report predicts that world economic growth will drop “markedly lower” to 4.1% this year from 5.5% last year. The report said the global economy is also expected to shrink by an additional 3.2% in 2023 as demand for goods and services eases and governments wind up large relief programs provided early in the pandemic.
The bank lowered its growth projections for the United States, the euro area and China and cautioned that high debt levels, rising income inequality and new strains of coronavirus variants threaten recovery in developing countries.
“Various downside risks together cloud the outlook, including Omicron-driven economic disruption, further supply constraints and lowering inflation expectations,” the report said, adding to the risks to global growth. could lead to a further decline of 0.7%.
World Bank President David Malpass told reporters that the pandemic, now in its third year, is taking a “heavy toll” on developing countries, which could have lasting adverse effects.
“We are seeing disturbing reversals in poverty, nutrition and health.” They said. “I am very concerned about the permanent mark on the development.”
The report expects advanced economies to grow at 3.8% in 2022, down from 5% in 2021, to 2.3% in 2023.
Economic growth in emerging and developing economies is projected to slow from 4.6% in 2022 to 6.3% in 2021 and 4.4% in 2023.
Unstable and conflict-ridden economies are expected to remain 7.5% below their pre-pandemic levels, while smaller island states, hit hard by the collapse of tourism, are projected to remain below their pre-pandemic levels of 8.5%.
Information in this report has been received from the agencies France-Press and Reuters.