File photo. Photograph:( Reuters )
The World Bank's Global Economic Prospects Report retained India's growth forecast for 2021-22 at 8.3 per cent, but raised it to 8.7 per cent and 6.8 per cent for 2022-23 and 2023-24, respectively.
The global economy is facing a dramatic downturn due to new dangers from COVID-19 variants, as well as rising inflation, debt, and income inequality, which might jeopardise the recovery in emerging and developing economies, according to the World Bank.
As pent-up demand fades, fiscal and monetary assistance is removed around the world, and supply disruptions linger, global growth is predicted to slow to 4.1 percent in 2022 and 3.2 percent in 2023, according to the Washington-based lender's Global Economic Prospects report released on Tuesday.
Following a strong rebound in 2021, the global economy is entering a pronounced slowdown amid fresh threats from COVID-19 variants and a rise in inflation, debt, and income inequality that could endanger the recovery in emerging and developing economies.
Also read | Omicron was in Canadian wastewater in November before it was found in South Africa
The World Bank said that global growth is expected to decelerate markedly from 5.5 percent in 2021 to 4.1 percent in 2022 and 3.2 percent in 2023 as pent-up demand dissipates and as fiscal and monetary support is unwound across the world.
The World Bank said economic growth in Europe and Central Asia will slow to 3 percent in 2022 and decline further to 2.9 percent in 2023, the World Bank said.
Watch | Gravitas: Omicron ushers in another supply chain crisis
ECA growth is expected to slow to 3% in 2022, roughly half of what it was in 2021, as tighter macroeconomic policy and recurring COVID-19 outbreaks, including from Omicron, weigh on demand.Regional growth is forecast to continue to ease in 2023, reaching 2.9 per cent, as fiscal support continues to be withdrawn, "the report said.
According to a World Bank report released in 2020, the damage caused by the COVID-19 pandemic — which triggered the worst recession since the Great Depression in the 1930s — was greater in middle-income and poor countries, reversing gains made in reducing poverty levels over the previous two decades.
Watch | Gravitas: Wuhan Virus returns to China
New COVID-19 outbreaks, persistent supply chain bottlenecks, and inflationary pressures could increase the risk of a hard landing in emerging markets and developing economies, according to the lender, at a time when many governments in developing economies lack the policy space to support activity if needed.
According to the report, the downturn will correspond with a widening gap in growth rates between advanced and emerging nations.
India to grow at 8.3%
India, on the other hand, is a relative bright spot in the South Asian picture.
The bank's forecast for India's growth in 2021-22 remains unchanged from its June forecast.
However, the forecasts for 2022-23 and 2023-24 have been revised to 8.7% and 6.8%, respectively, "indicating higher private sector and infrastructure investment, as well as dividends from continuing reforms."
According to preliminary estimates from the country's statistics office, India's GDP will increase 9.2 percent this fiscal year, ensuring that the economy will surpass its pre-pandemic level (2019–20).
In December, most high frequency indicators were at or above pre-pandemic levels, while limits imposed by the Omicron-driven third wave of the coronavirus pandemic caused increased disruptions in January.
(With inputs from agencies)