The World Bank warns of a “lost decade” in the global economy

The “speed limit” of global economic growth (the maximum rate at which it can grow without provoking inflation) by 2030 will fall to a minimum in the last three decades, according to World Bank (WB). This assessment of the situation gave in the report Falling Long-term Growth Prospects: Trends, Expectations and Policies.

So, according to information from release, almost all economic agents that have provided “progress and prosperity” over the past 30 years are gradually fading away. The World Bank expects that between 2022 and 2030, the average global potential GDP growth will decline to approximately 2.2% – that is, by about a third of the rate recorded in the first decade of the 21st century.

“It could be a lost decade for the global economy. The continued decline in potential growth has serious implications for the overall ability to address a growing array of challenges: poverty, income inequality and climate change,” said Indermit Gill, World Bank Chief Economist.

Nevertheless, the situation is reversible, Mr. Gill believes. The pace of growth can be increased through “policies that stimulate employment, increase productivity and accelerate investment.” The adoption by countries of the provisions of a sustainable growth policy, the economist believes, can disperse potential GDP growth to an average annual level of 2.9%.

“A bold, collective political push is needed. At the national level, each emerging economy will need to repeat its best 10-year record across a range of policies. At the international level, policy responses already call for greater global cooperation and increased efforts to mobilize private capital,” said Ayhan Kose, lead author of the report.

At the same time, the authors of the report provide specific ways to build sound policies at the national level: aligning monetary and fiscal policies, increasing investment, reducing trade costs, benefiting from the service sector, and increasing participation in demographic and labor force issues.

Finally, the report highlights the need to strengthen global cooperation. Its restoration will help stimulate trade, mobilize investment and accelerate action to combat climate change.

At the beginning of 2023, the World Bank revised its global growth forecast to 1.7% in 2023 and to 3% during 2024.

More about this – in the material “Kommersant” “Definitely no good”.

Grigory Leiba