Global GDP is predicted to drop from 3.1% in 2022 to 2.1% in 2023, according to the World Bank’s Global Economic Prospects report, with emerging market and developing economies (EMDEs) experiencing financial difficulties due to high global interest rates.
According to the research, one in every four EMDEs has effectively lost access to global bond markets, and these economies’ growth expectations for 2023 are less than half of what they were one year ago, putting them extremely exposed to future shocks. The research also predicts that per capita earnings in low-income nations would remain below 2019 levels in 2024.
According to projections, global growth will drop to 2.1% in 2023, with the majority of EMDEs expected to suffer minimal effects from recent banking stress in advanced countries but currently operating in perilous waters.
A lasting setback to development in EMDEs has been caused by the converging shocks of the epidemic, the Russian invasion of Ukraine, and the abrupt halt amid challenging global economic conditions, leaving them extremely vulnerable to future shocks.
With public debt currently averaging around 70% of GDP and 14 low-income countries already in, or at high danger of, debt distress, rising interest rates have made the fiscal circumstances of low-income nations much worse over the past ten years.
Following a severe decline in 2022, the East Asia and Pacific (EAP) region’s growth is now picking up steam. This recovery is being supported by China’s brisk activity following the reopening of its economy and a rapid decline in COVID-19 infections. Early in 2023, China’s economy experienced a strong recovery, which was aided by the resumption of stagnant demand, which raised consumption.
Global growth will fall to 2.1% in 2023, with financial uncertainties casting doubt on future prospects.
In 2023, it is expected that the GDP of the EAP region will increase to 5.5%, with China’s recovery balancing the region’s other economies’ slow growth. As China’s economy slows and the rest of the region has mostly stable growth, the EAP’s growth is expected to fall to 4.6% in 2024 and 4.5% in 2025, respectively. In comparison to the projections made in January, growth in EAP is predicted to be 1.2 percentage points higher in 2023 and 0.3 percentage points lower in 2024.
The primary cause of China’s growth being revised up by 1.3 percentage points in 2023 but down by 0.4 percentage points in 2024 is the country’s early reopening.
