One point (in percentage) less. 2023 will close with global GDP growth of 2.1%. The previous year it was 3.1%. A full-fledged snip that the World Bank gave yesterday in its forecast report, the first under the mandate of its new president, Ajay Banga. The motives? The main one is the effect of the rise in interest rates.
It is “another grim reportâ€, in the words of Indermit Gill, the institution’s chief economist, just as the economy was recovering from the pandemic and trying to digest the war in Ukraine. “From the synchronized global slowdown we have gone to the abrupt deceleration.” The world is contracting: in 2023, trade will grow at less than a third of the pace of the years before the pandemic.
The weak point in the chain are the emerging economies, which will go from 4.1% to 2.9%. “By the end of the year, a third of developing economies will not reach the per capita income they had at the end of 2019,” the study says. “So far, most emerging and developing countries have suffered only limited damage from recent banking stress in advanced economies, but they are now sailing in dangerous waters. With increasingly tight global credit conditions, one in four economies in this group have actually lost access to international bond markets.
The problem is that whoever is in debt now has to repay the money with higher interest rates. “Public debt is currently around 70% of GDP. Interest payments absorb an ever-increasing share of limited public revenue. Some 14 low-income countries are already in a situation of debt or are at high risk of suffering it, â€says the agency. The central banks have undertaken a restrictive monetary policy, withdrawing stimuli and raising the price of money, with the aim of stopping the growth of prices, which reached the highest levels in the last thirty years.
According to Simona Gambarini, executive director of strategic advice for EMEA and Asia at Goldman Sachs Asset Management, “in the US, a recession in the coming months will be likely, although it is not imminent and is even necessary to curb inflation.” In her opinion, the rise in prices is also due to external factors such as deglobalization, demography, the cost of decarbonization and imbalances in the labor market, which put pressure on wages. A new phase in which inflation has come to stay.
