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Global Economic Prospects

Slowing Growth, Rising Risks

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Foreword

In his Foreword, WBG President David Malpass reflects on both encouraging and troubling economic developments, clouded by many risks and considerable uncertainty and notes, “Against this mix of encouraging and troubling news, it is clear that challenging times lie ahead for the global economy—and particularly for developing countries—as economic stimulus slows and credit conditions tighten. Putting more countries on a favorable growth path will require concerted international action and a comprehensive set of national policy responses.”

Global and Regional Outlooks

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Global

Global growth is expected to decelerate to 4.1 percent in 2022, reflecting continued COVID-19 flare-ups, diminished fiscal support, and lingering supply bottlenecks. Although output and investment in advanced economies are projected to return to pre-pandemic trends next year, in emerging market and developing economies (EMDEs) they will remain markedly below. Downside risks to the global outlook include a synchronized pandemic resurgence, further supply disruptions, a de-anchoring of inflation expectations, unexpected financial stress, and poss... See More

Global and Regional Outlooks

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East Asia and Pacific

Growth in the East Asia and Pacific (EAP) region is projected to slow to 5.1 percent in 2022. While growth in China is forecast to ease to 5.1 percent amid tighter regulations and diminished support from exports, that in the rest of the region is projected to accelerate to 5 percent in 2022, buoyed by the release of pent-up demand and accelerated COVID-19 vaccination. In about one-fifth of countries—most notably in tourism-dependent economies—the projected recovery will not be sufficient to return output to its 2019 levels during the forecast p... See More

Global and Regional Outlooks

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Europe and Central Asia

Output in Europe and Central Asia (ECA) is estimated to have expanded by 5.8 percent in 2021, reflecting a rebound in domestic demand and positive spillovers from firming activity in the euro area. Growth is forecast to slow to 3 percent in 2022, as domestic demand stabilizes, and 2.9 percent in 2023, as external demand plateaus and commodity prices soften. The near-term outlook is weaker than previously projected, owing to recurrent COVID-19 flareups, a faster-than-expected withdrawal of macroeconomic policy support, and sharp increases in pol... See More

Global and Regional Outlooks

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Latin America and the Caribbean

Growth in Latin America and the Caribbean (LAC) rebounded to an estimated 6.7 percent in 2021, boosted by supportive external conditions and, in the second half of the year, rapid progress on COVID-19 vaccination and a sharp drop in new cases. Regional growth is projected to slow to 2.6 percent in 2022 and 2.7 percent in 2023, reflecting sluggish labor market improvement, tighter macroeconomic policy, softer external demand, and a fading boost from last year’s rise in commodity prices. Growth during the forecast horizon will not be sufficiently... 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 forecast to accelerate to 4.4 percent in 2022, reflecting tapering oil production cuts and accelerating vaccine progress, before slowing to 3.4 percent in 2023. Output in 2023 is projected to remain about 5 percent smaller than expected before the pandemic. Growth prospects are uneven across the region, with risks to the outlook predominately to the downside. Further COVID-19 outbreaks, social unrest, high debt in some economies, and conflict could undermine economic activity. Delays in struc... See More

Global and Regional Outlooks

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South Asia

Output in South Asia is projected to expand by 7.6 percent in 2022, accelerating from 7.0 percent the previous year, as COVID-19 vaccination progresses and contact-intensive sectors recover. Despite two years of robust growth, the projected rate of per capita income catch-up with advanced economies for 2021-23 has slowed and is only about half the rate of catch-up achieved in the decade prior to the pandemic. A resurgence of the pandemic, especially with the emergence of Omicron, is a key risk to the outlook. Other downside risks include inflat... See More

Global and Regional Outlooks

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Sub-Saharan Africa

Growth in Sub-Saharan Africa (SSA) reached an estimated 3.5 percent in 2021, supported by a rebound in commodity prices and a gradual easing of social restrictions. Nevertheless, recurrent virus flare-ups in several countries and low vaccination rates slowed the pace of the recovery. Growth is forecast to firm to 3.7 percent a year on average in 2022-23—somewhat above last June’s projections but insufficient to reverse increases in poverty and losses in per capita income. Slow progress with vaccinations is expected to underpin only a gradual re... See More

Three Topical Issues

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Resolving High Debt After the Pandemic: Lessons from Past Episodes of Debt Relief

In the pandemic-induced global recession of 2020, global debt levels surged. The rise in debt has led to several countries initiating debt restructurings, while many others are in or at high risk of debt distress and may also eventually need debt relief. Historically, several umbrella frameworks coordinated debt relief to multiple debtor countries from multiple creditors on common principles. They offered substantial—but protracted—debt stock reductions that were typically preceded by a series of less ambitious debt relief efforts. The G20 Comm... See More

Three Topical Issues

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Impact of Covid-19 on Global Income Inequality

The COVID-19 pandemic has raised global income inequality, partly reversing the decline that was achieved over the previous two decades. Weak recoveries in emerging market and developing economies (EMDEs) are expected to return between-country inequality to the levels of the early 2010s. Preliminary evidence suggests that the pandemic has also caused within-country income inequality to rise somewhat in EMDEs because of particularly severe job and income losses among lower-income population groups. Over the medium and long term, rising inflation... See More

Three Topical Issues

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Commodity Price Cycles: Drivers and Policies

Commodity prices soared in 2021 following the broad-based decline in early 2020, with prices of several commodities reaching all-time highs. In part, this reflected the strong rebound of demand from the 2020 global recession. Energy and metal prices generally move in line with global economic activity, and this tendency has strengthened in recent decades. Looking ahead, global macroeconomic developments and commodity supply factors will likely continue to cause recurring commodity price swings. For many commodities, these may be amplified by th... See More

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Global Economic Prospects

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