Developing countries at risk from global economic threats, says World Bank

theguardian.com:

The risk of a hard landing for large parts of the global economy is rising as countries struggle to cope with the triple threat of Covid-19, inflation and higher interest rates, the World fBank has said.

In its half-yearly forecasts, the Washington DC-based Bank said it expected a “pronounced slowdown” in growth in the next two years, with the less well-off parts of the world especially hard hit.

David Malpass, the World Bank’s president, called for action to reduce the debts of poor countries and said he was “very worried” about the permanent scarring of development caused by the pandemic. He said: “The world economy is simultaneously facing Covid-19, inflation, and policy uncertainty, with government spending and monetary policies in uncharted territory. Rising inequality and security challenges are particularly harmful for developing countries.”

With the Bank predicting a slowdown in growth from 5.5% in 2021 to 4.1% this year and 3.2% in 2023, Malpass added: “Putting more countries on a favourable growth path requires concerted international action and a comprehensive set of national policy responses.”

The Bank said the rapid spread of the Omicron variant suggested the pandemic was likely to continue disrupting economic activity in the near term, while a marked deceleration in the world’s two biggest economies – the US and China – would reduce exports from emerging and developing economies.

“At a time when governments in many developing economies lack the policy space to support activity if needed, new Covid-19 outbreaks, persistent supply-chain bottlenecks and inflationary pressures, and elevated financial vulnerabilities in large swathes of the world could increase the risk of a hard landing,” the report said.

Malpass