According to various hypotheses, “economic perturbations caused by the omicron may further reduce global economic growth this year” to 3.9 or even 3.4 percent. – the bank announced in a statement.
In the worst-case scenario, “a significant portion of the (economic) shock would be felt in the first quarter of 2022, followed by a significant recovery in the second quarter,” said the World Bank.
“The global economy faces COVID-19, inflation and political uncertainty”
Economic development remains very precarious. “The omicron variant has shown us that the pandemic is still spreading and we must learn to live with it,” Ayhan Kose, the bank’s vice president responsible for economic forecasts, told AFP.
“If this option stays with us for a long time and the number of infections remains high, putting pressure on health systems, economic growth will be weaker,” added Kose.
In a negative scenario that takes into account the further spread of the pandemic, economies will suffer even more from a labor shortage, which in turn will exacerbate problems related to supply chain disruptions, the World Bank predicts.
If inflation also rises significantly, the US central bank, or the Fed, may raise interest rates, which will hit the economies of indebted developing countries as it will increase the cost of debt servicing.
– The world economy faces simultaneously COVID-19, inflation and political uncertainty, with government spending and monetary policy in uncharted territory. Growing inequalities and security challenges are particularly damaging to developing countries, said David Malpass, head of the World Bank.
The bank stresses that it is worrying that “the prospects for further progress in vaccination against COVID-19 remain unclear in a group of countries.”
Kose added in an interview with AFP that as long as a significant proportion of the world’s population is not vaccinated, the threat of the emergence of new and more infectious variants of the coronavirus cannot be eliminated.
The World Bank presented lower economic growth forecasts
The GDP growth of the United States in 2022 is expected to amount to 3.7 percent. The World Bank revised downwards by 0.5 percentage points. forecast for the US due to the rapid spread of omicron.
According to the World Bank, growth in China in 2022 will be around 5.1%, which means that it will be slower than in 2021, when it was 8%.
In the euro area, economic growth should amount to 4.2%, and in developing countries – 4.6%.
The pandemic has significantly increased the risk of developing countries’ indebtedness; poor economic growth in these countries risks a possible loss of debt service capacity.
In January 2021, the bank forecast that world GDP should grow 3.8% in 2022 as the pandemic “caused permanent damage” with impacts on economic development, such as reduced investment and under-employment.
In 2020, the global economy contracted by around 4.3% due to the pandemic. and it was the deepest recession since World War II. (PAP)
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