But concerted efforts to boost investment in sustainable sectors, cut business costs, boost growth in services and expand labor force participation could boost potential GDP growth by as much as 0.7 percentage point to 2.9%, according to the report. .
“The world economy could be living a lost decade,” said Indermit Gill, chief economist at the World Bank, adding that policies that encourage work, increase productivity and accelerate investment could reverse the trend.
The report notes that overlapping crises of recent years, such as the COVID-19 pandemic and Russia’s invasion of Ukraine, have brought to an end nearly three decades of sustained economic growth, adding to growing concerns about slowing productivity, essential for income growth and rising wages.
As a result, average potential GDP growth will slow to 2.2% between 2022 and 2030, down from 2.6% in 2011-21, and almost a third below the 3.5% rate recorded between 2000 and 2010.
Low investment will also slow growth in developing economies, whose average GDP growth will fall to 4% for the rest of the 2020s, down from 5% in 2011-2021 and 6% in 2000-2010.
According to the report, rising productivity, rising incomes and falling inflation have contributed to one in four developing countries achieving high-income nation status over the past three decades, but this trend it is changing.
According to the report, productivity is likely to grow at the slowest rate since 2000, investment growth in 2022-2024 is likely to be half that of the past 20 years, and international trade is likely to grow at a much faster rate. slow.
To change the trajectory and attract more investment, the authorities must prioritize controlling inflation, guaranteeing the stability of the financial sector and reducing debt.
Increasing climate-friendly investment in transport and energy, climate-smart agriculture and manufacturing, and land and water systems could boost potential growth by as much as 0.3 percentage points a year, according to the report.