The Strategist

World Bank reviews economic forecast 2023

01/13/2023 - 09:58

As a result of underinvestment, rising global inflation, and a tightening financial climate, the World Bank has increased its forecast for global growth from 3% for both years in the prior version to 1.7% in 2023 and 2.7% in 2024.

The World Bank Group's new projection for the international economy was unveiled on January 10 and combines the WB's regular semi-annual forecast with some analysis from the group's economists on the world outlook for 2023–2024.

The group's leader, David Malpass, begins the report's foreword with the short statement, "The global development crisis is becoming worse," which serves as the WB's guiding principle for all geographical areas. 3% global GDP growth was predicted for 2023 in June 2022; however, that prediction has since been revised down to 1.7%, and the forecast for 2024 has been deteriorated from 3% to 2.7%.

There is no error in the present World Bank projection of 2.9% for the global GDP in 2022 (precise data will be released later; the report is currently discussing first estimates), but since June, significant changes have had to be made to the growth's structural makeup. The projections of the dynamics of the GDP in Russia were the most inaccurate in the June prediction; they were corrected for 2022 by 5.4 percentage points (p. p.); other amendments were added for Turkey (3.2 p. p.), Poland (2.4 p. p.), and Mexico (1.5 p. p.).

The key issues with the estimate for last year are the overestimation of growth in the euro area (which turned out to be lower by 0.6 p. p.) and in China, as well as the underestimation of GDP dynamics in Japan (which actually expanded by 0.8 p. p. more than in the WB June forecast) (by 1.2 p. p. less than previously expected).



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