WASHINGTON — The World Bank said on Tuesday that the pace of global economic growth was expected to slow in 2022, as new waves of the pandemic collide with rising prices and snarled supply chains, blunting the momentum of last year’s recovery.
This projection demonstrates the stubborn nature of the global public health crisis that is increasing inequality. Due to low vaccination rates and a rickety infrastructure in health care, the pandemic is wreaking havoc on developing countries.
“The Covid-19 crisis wiped out years of progress in poverty reduction,” David Malpass, the World Bank president, wrote in an introduction to the report. “As government’s fiscal space has narrowed, many households in developing countries have suffered severe employment and earning losses — with women, the unskilled and informal workers hit the hardest.”
According to the World Bank, global growth is expected to slow down to 4.1 percent this yea, from 5.5 percent in 2021. Inflation is expected to rise faster than previously thought, with output expected to be less.
The World Bank said growth rates in most emerging markets and developing economies outside East Asia and the Pacific would return to their prepandemic levels, still falling short of what would be needed to recoup losses during the pandemic’s first two years. The slowdown in these regions will be more abrupt than what advanced economies will experience, leading to what the World Bank describes as “substantial scarring” to output.
According to the World Bank, income inequality is growing within and between countries. This could be exacerbated by disruptions in education systems or if high national debts make it difficult for countries to provide support for low-income people. Low-income countries could be affected by higher interest rates and the withdrawal of fiscal support.
Growth in the world’s two largest economies, the United States and China, is poised to moderate considerably. The World Bank stated that the US’s recent infrastructure law would not be able to support growth in the near future and that pandemic restrictions were limiting consumer spending in China.
The World Bank recommends stronger debt relief programs to assist poor countries. It also urges support for policies that will strengthen their financial system and improve local infrastructure. This will help spur growth. It will be vital to reduce global supply chain bottlenecks for Covid vaccine doses.
“At the start of 2022 the supply of vaccines is increasing appreciably, but new variants and vaccine deployment bottlenecks remain major obstacles,” Mr. Malpass said.
Source: NY Times