Although economic growth rebounded sharply in 2021, it is expected to decline markedly from 5.5% last year to 4.1% in 2022 and decline to 3.2% in 2023.
Stall and slow down
In addition, a marked slowdown in growth in the largest economies, including the US and China, will affect external demand in emerging and developing economies.
“The global economy is simultaneously facing COVID-19, inflation and political uncertainty, and government spending and monetary policy are in uncharted territory. Growing inequality and security concerns are particularly detrimental to developing countries. ” said David Malpass, President of the World Bank Group.
“Putting more countries on a healthy growth path requires concerted international action and a comprehensive set of national policy responses.”
The slowdown will coincide with widening growth disparities between advanced economies and emerging market or developing economies.
A downturn in a fragile economy
All advanced economies will achieve full production recovery by 2023, the report said, but output in emerging and developing economies will remain four percent below its pre-pandemic trend.
This decline is even more pronounced in fragile and conflict-affected economies, where output will be 7.5% below pre-pandemic levels. For small island states, it will be 8.5% lower.
Meanwhile, rising inflation is holding back monetary policy, with low-income workers particularly hit. Inflation reached its highest level since 2008 in both the world and advanced economies, and reached its highest level in a decade in emerging and developing economies.
Prioritizing equity for vaccines
The report contains analytical sections that describe three emerging obstacles to sustainable economic recovery in developing countries. It also includes regional growth prospects over the next two years.
Marie Pangestou, Managing Director of Development Policy and Partnerships at the World Bank, stressed the importance of multilateral cooperation, as decisions made by policymakers in the coming years will determine the course of the next decade.
“The immediate priority must be to ensure wider and more equitable distribution of vaccines so that the pandemic can be brought under control. But tackling underdevelopment challenges such as rising inequality will require continued support. ” she said.
“In times of high debt, global cooperation will be essential to expand the financial resources of developing countries to achieve green, sustainable and inclusive development.”