Last Tuesday, the World Bank revised downward growth expectations for the global economy this year. there is bad newsthe negative scenarios foreseen from 2022 begin to crystallizeAt least that is the first panorama that this institution draws for us.
The scenario is negative, we know that since last year, but there was some favorable expectation and the truth of things, what the World Bank stated in its report is cause for concern. Above all, it condemns several regions of the planet to almost non-existent growth, at the same time that it speaks of the probable recession.
Without referring to specific names, the World Bank assures that developing economies will literally “get it in the dark”, And of course, if the industrialized countries will have a very bad year, here are the highlights:
Widespread economic collapse
According to the World Bank report, this year the global economy will grow at an average rate of 1.7 percent, which means 1.3 percent less than what the institution projected in June of last year. If the World Bank projection is confirmed, it would be the third lowest growth in the last thirty years without considering the periods of the great recessions of this century, that is, the years 2009 and 2020. It is an abrupt economic slowdown for the planet.
The specialists of the multilateral financial organization consider that, due to the indebtedness and also to the increases in costs and interest rates, there is little fiscal space for most of the countries, which will have a special impact on countries with fewer economic resources.
Recession if the giants fall
The economic weakening in China, the United States and the Eurozone could be a determining factor for an eventual recession in the planet, coupled with ongoing geopolitical tensions and restrictive monetary policy. The World Bank warned that Given a context of high debt and further increases in interest rates, several corporate defaults could be seen. Obviously, the decline in economic dynamics in developed countries will have an impact on emerging nations, especially those in which exports play an important role.
That is certainly a warning for Mexico, not directly, but our country could be at risk, It is not for nothing that the projection of the World Bank places the GDP of the Aztec nation at less than 1 percent. If the giants fall, record lower growth, which everything indicates they will, recession in most of the world will be inevitable, and it will hit the weakest countries the hardest.
Giants with feet of clay
Unfortunately, the projections around the most important countries or regions are not entirely favourable; in fact, an economic collapse is appreciated except in China, although it will not be something to celebrate either.
Thus, projections by World Bank specialists indicate that growth for the United States will be located at 0.5 percent for this yearwhich represents a considerable adjustment taking into account that last year the GDP of the largest economy on the planet stood at 1.9 percent.
In the case of the Eurozone, the forecasts are even more negative; in fact, there is talk that the region has practically been in recession since the last months of last year. The projected GDP will be located at zero percent; that is, there will be no growth in this part of the world, something that represents a significant drop from the 3.3 growth observed in 2022.
The case of China is different, this country will have growth; According to the World Bank, China’s GDP will grow 4.3 percent this year, up from the 2.7 percent it registered in 2022.However, we are not facing the best of years in terms of growth for China, considering that the country has recorded increases in its GDP of up to 15 percent per year. This growth in China’s GDP is only moderate and will have little influence in the world.
Some good news will help ease global pressures, eg falling inflation; also supply chains could improve their condition in the coming months. In this framework, the increase in interest rates and an eventual pause by central banks at their highest levels would be a factor for additional pressure in the corporate world.
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