COVID’s Omicron strain, supply-line chaos, labor shortages, and the end of government and central-bank stimulus programs will combine to slow global economic growth this year, the World Bank has predicted.
The world’s economic output grew by 5.5 percent in 2021, the best post-recession performance in 80 years, the bank said in its semi-annual Global Economic Prospects Report, but this year will cool to a 4.1-percent expansion.
The pace of growth will slacken to 3.2 next year, the bank said.
“At a time when many developing economies lack the policy space to support activity if needed, new COVID-19 outbreaks, persistent supply-chain bottlenecks, inflationary pressures, and elevated financial vulnerabilities in large swaths of the world could increase the risk of a hard landing,” the report warned.
However, major economies also will not be spared.
The U.S. pace of growth will slow from 5.6 percent to 3.7 percent, the bank predicted, and China’s will dive from 8 percent to 5.1.
In contrast, Indonesia, Japan, Malaysia, Thailand, and Vietnam will increase their economic outputs this year, according to the bank.
In this year’s second half, labor shortages and supply-chain disruptions will ease, the bank believes, helping inflation to slow and commodity prices to decline.
TREND FORECAST: As interest rates rise across most of the globe, economies will decline much deeper than the World Bank estimates. In response to the lack of basic living standards, government corruption, crime and violence, masses will take to the streets in protests, civil unrest will escalate and governments will clamp down hard on demonstrators.
Also, the deeper socioeconomic conditions decline, the stronger the migrant waves of people leaving their countries to find safe-haven nations.