BAKU, Azerbaijan, March 27. The average potential growth of global GDP is forecast to decline to about a third from the rate of the first decade of this century - to 2.2 percent per annum, Trend reports via the latest overview from the World Bank (WB).
"For developing economies, the decline will be equally steep: from 6 percent a year between 2000 and 2010 to 4 percent a year over the remainder of this decade. These declines would be much steeper in the event of a global financial crisis or a recession," the report said.
Indermit Gill, the World Bank’s Chief Economist and Senior Vice President for Development Economics, predicts a "lost decade" for the global economy.
"The ongoing decline in potential growth has serious implications for the world’s ability to tackle the expanding array of challenges unique to our times - stubborn poverty, diverging incomes, and climate change. But this decline is reversible. The global economy’s speed limit can be raised - through policies that incentivize work, increase productivity, and accelerate investment," he said.
Moreover, according to the WB analysis, potential GDP growth could be increased by as much as 0.7 percentage points - to an annual average of 2.9 percent - if countries adopt sustainable growth-oriented policies.
"A bold and collective policy push must be made now to rejuvenate growth. At the national level, each developing economy will need to repeat its best 10-year record across a range of policies. At the international level, the policy response requires stronger global cooperation and a reenergized push to mobilize private capital," Ayhan Kose, Director of the World Bank’s Prospects Group, said.