Washington, March 28: The global economy’s growth rate is set to plunge to a three-decade low by 2030, the World Bank has warned in a new report on Monday.
It said that nearly all the economic forces that powered progress and prosperity over the last three decades were fading.
“As a result, between 2022 and 2030 average global potential GDP growth is expected to decline by roughly a third from the rate that prevailed in the first decade of this century—to 2.2 per cent a year,” the global institution said in its new report titled – ‘Falling Long-Term Growth Prospects: Trends, Expectations, and Policies’.
For developing economies, the report said, the decline will be equally steep from 6 per cent a year between 2000 and 2010 to 4 per cent a year over the remainder of this decade. “These declines would be much steeper in the event of a global financial crisis or a recession,” the report said.
The World Bank has in the last few reports predicted that the global economy may be heading towards recession in the second half of this year. In September last year, the institution said that as central banks across the world simultaneously hike interest rates to fight high inflation, the world may be edging toward a global recession in 2023.
The latest report offers the first comprehensive assessment of long-term potential output growth rates in the aftermath of Covid and the Russian invasion of Ukraine. These rates, the report said, can be thought of as the global economy’s ‘speed limit’ – the maximum rate at which the economy can grow without sparking inflation.
“A lost decade could be in the making for the global economy,” World Bank’s Chief Economist Indermit Gill while commenting on the report released on Monday.
The analysis, however, showed that potential GDP growth can be boosted by as much as 0.7 percentage points to an annual average rate of 2.9 per cent if countries adopt sustainable, growth-oriented policies. “That would convert an expected slowdown into an acceleration of global potential GDP growth,” the report said.
