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Global Economic Prospects

A Second Year of Sharply Slowing Growth

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Foreword

In his Foreword, WBG President David Malpass emphasizes that the crisis facing development is intensifying. He notes that the latest growth forecasts indicate a sharp, long-lasting slowdown, with global growth declining to 1.7 percent in 2023—roughly half the rate expected just six months ago. The deterioration is broad-based: in virtually all regions of the world, per-capita income growth will be slower than it was during the decade before COVID-19. The setback to global prosperity will likely persist: By the end of 2024, the level of GDP in emerging market and developing economies will be about 6 percent below the level expected on the eve of the pandemic.

Global and Regional Outlooks

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Global

Global growth is projected to slow to 1.7 percent in 2023—the third-weakest pace in nearly three decades, overshadowed only by the global recessions of 2009 and 2020. This slowdown is partly due to policy tightening aimed at reining in high inflation. Negative shocks, such as higher inflation, tighter policy, or financial stress, could push the global economy into recession. Immediate action is needed to mitigate the risks of global recession and debt distress. It is also essential that policy makers ensure that any support is focused on vulner... See More

Global and Regional Outlooks

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East Asia and Pacific

Growth in the East Asia and Pacific region is projected at 4.3 percent in 2023—a pickup from last year’s estimated 3.2 percent pace, and almost entirely on account of a projected rebound in China. As mobility restrictions ease, growth in China is forecast to firm from 2.7 percent in 2022 to 4.3 percent this year, still below its potential growth rate owing to continued pandemic-related disruptions. Growth in the rest of the region is expected to slow from 5.6 percent in 2022 to 4.7 percent in 2023, as pent-up demand dissipates and declining goo... See More

Global and Regional Outlooks

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Europe and Central Asia

Growth in Europe and Central Asia is estimated to have sharply decelerated in 2022, to 0.2 percent, and is projected to remain essentially unchanged at 0.1 percent in 2023. This weakness largely reflects contraction in the Russian Federation in both years and a deep recession in Ukraine in 2022. Excluding these two economies, output in ECA is forecast to grow by a modest 2.1 percent in 2023. Disruptions to the supply of energy in Europe, related to the Russian invasion of Ukraine, and synchronous monetary policy tightening have dampened economi... See More

Global and Regional Outlooks

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Latin America and the Caribbean

Growth in Latin America and the Caribbean is forecast to slow to a meager 1.3 percent in 2023 before recovering somewhat to 2.4 percent in 2024. Decelerating global demand will dampen the external drivers of near-term growth in the region, while domestic demand will be curbed by monetary policy tightening and persistent policy uncertainty in some countries. The main downside risks to the outlook are external: tightening global financial conditions could precipitate capital outflows and currency depreciations, and the global economy could slow m... See More

Global and Regional Outlooks

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Middle East and North Africa

Growth in the Middle East and North Africa region is projected to slow to 3.5 percent in 2023, as the boost from the earlier increase in oil production and the recovery in services following reopening from the pandemic fade. Prospects vary substantially across the region, with some economies facing macroeconomic instability and conflict while others grow above their potential. Spillovers from further weakness in key trading partners, tighter global financial conditions, increasing climate-related risks, rising social tensions, and political ins... See More

Global and Regional Outlooks

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South Asia

South Asia continues to be adversely affected by spillovers from the invasion of Ukraine, rising global interest rates, and weakening growth in key trading partners. Regional growth is estimated to have slowed to 6.1 percent in 2022 and is projected to slow further to 5.5 percent in 2023—below previous projections on global spillovers—before picking up to 5.8 percent in 2024. Risks to the outlook continue to be tilted to the downside, including further pressure from tightening global financial conditions; higher-than-projected inflation leading... See More

Global and Regional Outlooks

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Sub-Saharan Africa

Growth in Sub-Saharan Africa slowed to an estimated 3.4 percent in 2022, as weakening external demand, high inflation, and tightening global financial conditions dampened regional activity. Soaring food and energy prices, stemming partly from the war in Ukraine, triggered sharp cost-of-living increases across the region, leading to millions more people falling into food insecurity and poverty. Global demand for many nonenergy commodities softened, adversely affecting the region’s exporters of industrial metals. Fiscal space needed to protect th... See More

Two Topical Issues

GEP 2023

Investment Growth after the Pandemic

Investment growth in emerging market and developing economies (EMDEs) is expected to remain below its average rate of the past two decades through the medium term. This subdued outlook follows a decade-long, geographically widespread investment growth slowdown before the COVID-19 pandemic. An empirical analysis covering 2000-21 finds that periods of strong investment growth were associated with strong real output growth, robust real credit growth, terms of trade improvements, growth in capital inflows, and investment climate reform spurts. Each... See More

Two Topical Issues

GEP 2023 Logo

Small States: Overlapping Crises, Multiple Challenges

Small states’ economies were hit particularly hard by COVID-19, largely due to prolonged disruptions to global tourism. Now facing spillovers from the Russian Federation’s invasion of Ukraine and the global monetary tightening cycle, small states are expected to have weak recoveries with large and possibly permanent losses to the level of output. Small states are diverse in their economic features, but they share attributes that make them especially vulnerable to shocks, including dependence on imports of essential goods, highly concentrated ec... See More

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Global Economic Prospects

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