London Daily

Focus on the big picture.
Friday, Jul 04, 2025

World Bank warns global economy faces grim outlook

World Bank warns global economy faces grim outlook

The bank predicts a "pronounced slowdown", with global economic growth falling to 4.1% this year

The global economy faces a "grim outlook", World Bank president David Malpass has warned, as the aftershocks of the pandemic continue to weigh on growth - especially in poor countries.

His organisation's latest forecast predicts global growth will slow to 4.1% this year from 5.5% in 2021.

It attributed the slowdown to virus threats, government aid unwinding and an initial rebound in demand fading.

But Mr Malpass said his greatest worry was widening global inequality.

"The big drag is the inequality that's built into the system," he told the BBC, noting that poorer countries were especially vulnerable to economic damage from efforts to fight inflation.

"The outlook for the weaker countries is still to fall further and further behind. That causes insecurity."

By 2023, economic activity in all advanced economies, such as the US, Euro area and Japan, is likely to have recovered from the hit it took during the pandemic, the bank said.

But output in developing and emerging countries is expected to remain 4% lower than it was before Covid struck.


Mr Malpass blamed stimulus programmes in the richest countries for worsening the divide by driving global inflation. While officials in many countries, including the US, are now expected to raise interest rates to try to rein in price increases, Mr Malpass warned higher borrowing costs could hurt economic activity - especially in weaker economies.

"The problem with rate hikes is it hurts people that need floating rate money... and that's usually new businesses, women-owned businesses, developing country businesses," Mr Malpass said.

Separately, the World Economic Forum (WEF) warned that divergent economic recoveries were making it harder to collaborate on global challenges such as climate change.

"Widening disparities within and between countries will not only make it more difficult to control Covid-19 and its variants, but will also risk stalling, if not reversing, joint action against shared threats that the world cannot afford to overlook," the WEF said in its annual global risks report on Tuesday.

The World Bank's Global Economic Prospects report said that in 2021 the world's economy bounced back from the pandemic with the strongest post-recession expansion in 80 years.

But the gains are expected to slow this year, as virus variants and rapidly rising prices for items such as food and energy weigh on households. Globally, inflation is at its highest rate since 2008, the report says.

The bank, which lends to countries around the world, also warned that supply chain bottlenecks and the unwinding of stimulus programmes posed risks.

The slowdown in the second half of 2021 was already larger than the bank had expected in its June forecast due to the spread of the Omicron and Delta Covid variants. It expects a "pronounced slowdown" this year, and predicts global growth will decelerate further in 2023, to 3.2%.

"The reality is that Covid and the shutdowns are still taking a huge toll and that's especially true on people in poorer countries," Mr Malpass said. "Just a grim outlook."

David Malpass warned rate rises could hit growth in weaker economies


Driving the global slowdown are China, where the rate of growth is expected to drop to 5.1% from 8% last year, and the US, which is forecast to expand by 3.7% this year compared with 5.6% in 2021. In the eurozone, expansion will slow to 4.2% this year from 5.2%, the bank predicts.

India presents a bright spot, with the growth rate expected to rise from 8.3% to 8.7% this year.

But many emerging markets continue to struggle with additional challenges, such as lower vaccination rates.

In Latin America and the Caribbean, for instance, growth is expected to slow to 2.6% in 2022, from 6.7% last year.

Newsletter

Related Articles

0:00
0:00
Close
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
Poland Implements Border Checks Amid Growing Migration Tensions
Political Dispute Escalates Between Trump and Musk
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
US Senate Votes to Remove AI Regulation Moratorium from Domestic Policy Bill
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
Jury Deliberations in Diddy Trial Yield Partial Verdict in Serious Criminal Charges
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
King Charles Plans Significant Role for Prince Harry in Coronation
Two Chinese Nationals Arrested for Espionage Activities Against U.S. Navy
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
Trump Administration Considers Withdrawal of Funding for Hospitals Providing Gender Treatment to Minors
Texas Enacts Law Allowing Gold and Silver Transactions
China Unveils Miniature Insect-Like Surveillance Drone
OpenAI Secures Multimillion-Dollar AI Contracts with Pentagon, India, and Grab
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Elon Musk Critiques Senate Budget Proposal Over Job Losses and Strategic Risks
Los Angeles Riots ended with Federal Investigations into Funding
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Education Secretary Announces Overhaul of Complaints System Amid Rising Parental Grievances
Massive Anti-Government Protests Erupt in Belgrade
Trump Ends Trade Talks with Canada Over Digital Services Tax
UK Government Softens Welfare Reform Plans Amid Labour Party Rebellion
Labour Faces Rebellion Over Disability Benefit Reforms Ahead of Key Vote
Jeff Bezos and Lauren Sánchez Host Lavish Wedding in Venice Amid Protests
Trump Asserts Readiness for Further Strikes on Iran Amid Nuclear Tensions
North Korea to Open New Beach Resort to Boost Tourism Economy
UK Labour Party Faces Internal Tensions Over Welfare Reforms
Andrew Cuomo Hints at Potential November Comeback Amid Democratic Primary Results
Curtis Sliwa Champions His Vision for New York City Amid Rising Crime Concerns
Federal Reserve Proposes Changes to Capital Rule Affecting Major Banks
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Trump Escalates Criticism of Media Over Iran Strike Coverage
Trump Announces Upcoming US-Iran Meeting Amid Controversial Airstrikes
Trump Moves to Reshape Middle East Following Israel-Iran Conflict
Big Four Accounting Firms Fined in Exam Cheating Scandal
NATO Members Agree to 5% Defense Spending Target by 2035
Australia's Star Casino Secures $195 Million Rescue Package Amid Challenges
UK to Enhance Nuclear Capabilities with Acquisition of F-35A Fighter Jets
×