World Bank Lowers Global Economic Growth Forecast to 4.1% This Year...Significantly Slower Than Last Year

[Photo by Reuters Yonhap News]

[Asia Economy Reporter Park Byung-hee] The World Bank released its semi-annual global economic outlook report on the 11th (local time), projecting the global economic growth rate for this year at 4.1%. This is 0.2 percentage points lower than the 4.3% forecast presented in the semi-annual report last June. Reflecting the base effect from the global economic recession caused by the spread of COVID-19 in 2020, this represents a significant slowdown compared to last year's growth rate of 5.5%, the highest in 80 years.

The World Bank warned, "The emergence of COVID-19 variants, ongoing supply chain disruptions, inflationary pressures, and increased financial vulnerabilities could raise the risk of a hard landing for the global economy." The increased financial vulnerabilities are interpreted as referring to the impact of the U.S. Federal Reserve's interest rate hikes on the global financial markets.

The World Bank also forecasted that the economic growth rates of the U.S. and China will significantly slow down compared to last year.

The U.S. economic growth rate is expected to slow from 5.6% last year to 3.7% this year. China's economic growth rate for this year is projected at 5.1%, down 2.9 percentage points from last year. The growth rate forecasts for the U.S. and China this year have been revised downward by 0.5 percentage points and 0.3 percentage points, respectively, compared to the forecasts made last June.

Chief Economist Ayhan Kose warned that if Omicron infections surge, the global economic outlook could fall by 0.7 percentage points to as low as 3.4%.

In addition to COVID-19, the World Bank identified supply chain disruptions and inflation as new variables, analyzing these as global economic risk factors affecting even advanced economies. It particularly pointed out that emerging and developing countries with low vaccination rates could exacerbate supply chain disruptions by halting factory operations.

The World Bank stated, "Supply chain disruptions are due to temporary factors such as factory and port closures caused by the COVID-19 pandemic and logistics delays due to weather," and added, "Supply chain disruptions are expected to gradually ease this year." It also forecasted that prices will gradually stabilize as supply chain disruptions are resolved.

The World Bank expects the global economic growth rate next year to slow further to 3.2% compared to this year.

This content was produced with the assistance of AI translation services.