Global economic growth will dip sharply from 5.5% in 2021 to 4.1% in 2022 and 3.2% in 2023, even as India’s annual growth is projected to be 8.3% in the current fiscal year, 8.7% in 2022-23, and 6.8% in 2023-24, according to the World Bank’s Global Economic Prospects Report, released on Tuesday. The report also flagged the risks posed by growing inequality and rising inflation.
After having recovered in 2021, the global economy is headed towards a “pronounced slowdown”, due to the new variants of Covid-19; a rise in inflation, debt and income inequality; the winding down of fiscal and monetary support; and the fading of pent-up demand – all of which have eroded recovery prospects in emerging and developing economies in particular.
“The rapid spread of the Omicron variant indicates that the pandemic will likely continue to disrupt economic activity in the near term. In addition, a notable deceleration in major economies — including the United States and China — will weigh on external demand in emerging and developing economies. At a time when governments in many developing economies lack the policy space to support activity if needed, new Covid-19 outbreaks, persistent supply-chain bottlenecks and inflationary pressures, and elevated financial vulnerabilities in large swaths of the world could increase the risk of a hard landing,” said the report.