The World Bank warns of a “lost economic decade” with the spread of financial chaos in the world
“It seems that the golden age of development is coming to an end”, according to a new report that predicts a pessimistic reality towards 2030 for the entire global economy
The world is in a precarious state, against the backdrop of a continuing potential for nuclear conflict. ,
Central banks take aggressive steps to deal with high inflation by raising interest rates, which in turn causes a banking crisis in the western world.
This is when the risk of a global recession indicates that the world economy may be going down a dark path. ,
Indeed, “a lost decade may be in the making for the world economy,” warned Indermit Gil, the World Bank’s chief economist and senior vice president for development economics, in a new report.
The report, titled “Decline in long-term growth prospects: trends, expectations and policies”.Reveals new projections showing that long-term potential output is likely to fall:
“Almost all the economic forces that drove progress and prosperity in the last three decades are fading.”
“As a result, between 2022 and 2030, the average potential growth of global GDP is expected to decrease by about a third – to 2.2% per year.”
“For the developing countries, these declines will be much steeper in the event of a global financial crisis or recession.”
The chief economist of the World Bank continued:
“The continued decline in potential growth has serious consequences for the world’s ability to deal with the expanding range of challenges unique to our time – persistent poverty, diverging incomes, and climate change.”
However, he said:
“This decline is reversible through policies that stimulate work, increase productivity and accelerate investments.”
Ayhan Khosa, director of the World Bank’s forecasting group, said that the collapse of the global economy suggests that “the golden age of development is coming to an end.”
Earlier this year, the World Bank warned the world’s central banks to remain alert to the economic risks associated with aggressive monetary policy tightening aimed at fighting inflation.
As these risks may have far-reaching consequences.
Just a few weeks ago, the emergence of a regional banking crisis in the US and problems with Credit Suisse in Europe illustrated the validity of the concerns.
Besides a banking crisis, central bankers also face the total nemesis – stagflation…
While the global economy appears to be on a crash course with a ‘hard landing’, the World Bank admits that “a Herculean collective policy effort will be required to return growth in the next decade to the average of the previous one”.
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