World Bank report The World Bank's report on the state of the economy warns that we could be entering a “lost decade” unless governments make bold policy changes, increasing investment and cutting trade costs to reverse the trend.
Bold policy changes The World Bank has warned that ambitious moves to boost labor supply, productivity and investment are needed to avoid the economic trend of slowing global growth. They also argued that labor market participation needed to be increased.
GDP slowdown Experts fear that a slowdown in potential gross domestic product (GDP) growth will mean the world will be unable to address outstanding issues such as climate change and poverty reduction.
Speed limit GDP growth rates are like a speed limit for the economy. They indicate the maximum speed at which global production can grow without sparking inflation.
Investing in sustainable sectors, harnessing service sector growth and increasing labor force participation could boost projected growth by 0.7 percentage points from 2.2% to 2.9%, the report said.
"Lost decade" looms "The global economy could face a lost decade," said Indermit Gill, chief economist at the World Bank, if policy changes are not made.
Banking sector Ayhan Kose, director of the World Bank's forecasting group, told Reuters that the World Bank is also monitoring developments in the banking sector. He explained that rising interest rates and tighter financing conditions are making it harder for developing countries to access credit.
International crisis After the collapse of the Silicon Valley Bank and Credit Suisse in March, the banking sector worldwide is also suffering from trust problems. Despite the US government's efforts to contain the crises, the sector has been affected worldwide.
Weak resistance The report also warned that the new crisis could weigh too heavily on the global economy. "The recession we are describing could be much more pronounced if another global financial crisis hits, especially if that crisis is accompanied by a global recession," Kose told reporters.
Overlapping crises Overlapping crises caused the economic downturn. According to the report, the COVID-19 pandemic, the Russian invasion of Ukraine and other emergencies ended three decades of economic growth.
A third since 2010. The projected average GDP growth of 2.2% in 2022-2030 is lower than the 2.6% for 2011-2021 and almost a third lower than the average of 3.5% in 2000- 2010 He also said productivity is expected to grow at the slowest pace since 2000.
A hit to developing countries Developing economies had the highest GDP growth rate between 2000 and 2020 but are also more affected by the crises: it has fallen from 5% to 4% since the second decade and two points from the 6% of the first decade.