One point (in percentage) less. 2023 will end with global GDP growth of 2.1%. The previous year it was 3.1%. A full-blown scissor, what the World Bank did yesterday in its forecast report, the first under the mandate of its new president, Ajay Banga. The reasons? The main one is the effect of the rise in interest rates.
It is “another grim report”, in the words of Indermit Gill, the institution’s chief economist, just as the economy was recovering from the pandemic and trying to weather the war in Ukraine. “We have gone from a synchronized global slowdown to an abrupt deceleration”. The world is contracting: in 2023 trade will grow at less than a third of the rate experienced in the years before the pandemic.
The weak point in the chain is 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,” says the study. “So far, most emerging and developing countries have suffered only limited damage from recent banking stresses in advanced economies, but now they are navigating dangerous waters. With increasingly restrictive global credit conditions, one in four economies in this group has, in fact, lost access to international bond marketsâ€.
The problem is that whoever is in debt now has to pay back the money with higher interest. “Public debt is currently around 70% of GDP. Interest payments absorb an ever-increasing share of limited public revenues. Some 14 low-income countries are already in a situation of debt or are at high risk of suffering it”, says the organization. Central banks have adopted a restrictive monetary policy, withdrawing stimulus and raising the price of money, with the aim of slowing the growth of prices, which have reached the highest levels in the last thirty years.
According to Simona Gambarini, Executive Director of Strategic Advisory for EMEA and Asia at Goldman Sachs Asset Management, “a recession in the United States is likely in the coming months, but it is not imminent and even necessary to curb inflation”. In his opinion, the rise in prices is also due to external factors such as deglobalisation, demographics, the cost of decarbonisation and labor market imbalances, which put pressure on wages. A new phase, in which inflation is here to stay.
