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WASHINGTON: The World Bank (WB) has warned that the global growth will “decelerate markedly” this year, but the Omicron variant of Covid-19 that is spreading rapidly worldwide could make the situation worse.
In its latest Global Economic Prospects report, the Washington-based development lender cut its forecast for world economic growth this year to 4.1 percent after the 5.5 percent rebound last year.
The forecasts for growth last year and this year were both 0.2 percent lower than estimates released in June.
However, the bank warned, “Various downside risks cloud the outlook, including simultaneous Omicron-driven economic disruptions, further supply bottlenecks (and) a de-anchoring of inflation expectations,” the report said.
That could further reduce global growth this year to as low as 3.4 percent, a drop of 0.7 percentage points.
World Bank President David Malpass worries about the “huge toll” the pandemic is inflicting on people in poor countries, which could have ramifications for the future.
“We’re seeing troubling reversals in poverty, nutrition and health. The reversal and education or scope from schools closures will have a permanent impact,” he told reporters. “I’m very worried about the permanent scar on development.”
Faced with inflation at a 40-year high, the US Federal Reserve is expected to begin raising interest rates soon, and perhaps take more aggressive steps, which will raise borrowing costs for developing countries already burdened with record debt.
