The World Bank has revised its global growth forecast downward, citing ongoing inflationary pressures, increasing interest rates, and the continued impact of geopolitical instability. The institution’s latest report indicates a broad slowdown affecting both advanced and emerging economies.

Key Factors Influencing the Downgrade

• Inflation: Persistent high inflation erodes purchasing power and dampens consumer spending.
• Interest Rates: Central banks’ efforts to curb inflation through interest rate hikes are expected to constrain economic activity.
• Geopolitical Tensions: The war in Ukraine and other geopolitical factors continue to disrupt supply chains and increase uncertainty.

Regional Impacts

The slowdown is anticipated to be widespread, with varying degrees of impact across different regions:

Developed Economies

Growth in developed economies is projected to decelerate significantly as tighter monetary policy weighs on investment and consumption.

Developing Economies

Developing economies face a combination of challenges, including weaker external demand, higher borrowing costs, and increased risk of debt distress.

Risks to the Outlook

The World Bank cautions that the outlook remains subject to significant downside risks, including:

• A sharper-than-expected rise in interest rates
• An escalation of geopolitical tensions
• A resurgence of the COVID-19 pandemic

The institution emphasizes the need for policymakers to take decisive action to mitigate these risks and support sustainable and inclusive growth.