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World Bank forecasts 3% growth in 2023

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The World Bank has forecast the local economy to accelerate by three percent in 2023.

The forecast by the World Bank is contained its flagship report, The Global Economic Prospects, released in Washington, the United States, Tuesday.

The growth rate is, however, 3 percentage points shy of the 2.7 percent growth rate predicted by Finance Minister Sosten Gwengwe on Monday.

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The 2023 growth projection by the World Bank is also 0.6 percentage points better than the 2.4 percent predicted by the International Monetary Fund (IMF) in November last year.

The growth rate is, however, three percent shy of the desired six percent per annum growth that Malawi desperately needs to attain its goal of achieving a lower middle income economy status by 2030.

Speaking during pre-budget consultations in Blantyre on Monday, Gwengwe said the local economy is still recovering from the effects of Covid, climate-related shocks and economic effects of the Russia-Ukraine war.

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“Nevertheless, the economy is projected to grow by 2.7 percent in 2023. Other macroeconomic indicators also show signs of economic recovery,” Gwengwe said.

According to the World Bank, global growth is slowing sharply in the face of elevated inflation, higher interest rates, reduced investment and disruptions caused by the Russia- Ukraine war.

It says given fragile economic conditions, any new adverse development—such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the Covid pandemic or escalating geopolitical tensions—could push the global economy into recession.

This, according to the bank, would mark the first time in more than 80 years that two global recessions have occurred within the same decade.

The global economy is projected to grow by 1.7 percent in 2023 and 2.7 percent in 2024. The sharp downturn in growth is expected to be widespread, with forecasts in 2023 revised down for 95 percent of advanced economies and nearly 70 percent of emerging market and developing economies.

World Bank President David Malpass said, in the Global Economic Prospects report, that the crisis facing development is intensifying.

According to Malpass, the World Bank latest forecasts indicate a sharp, long-lasting slowdown, with global growth declining to 1.7 percent in 2023 from 3.0 percent expected just six months ago.

“The deterioration is broad-based: in virtually all regions of the world, per-capita income growth will be slower than it was during the decade before Covid. The setback to global prosperity will likely persist: By the end of 2024, GDP levels in emerging-market and developing economies (EMDEs) will be about six percent below the level expected on the eve of the pandemic.

“Median income levels, moreover, are being eroded significantly—by inflation, currency depreciation and under-investment in people and the private sector,” Malpass said.

The Global Economic Prospects report highlights why the outlook is particularly devastating for many of the poorest economies, where poverty reduction has already ground to a halt.

The World Bank head said total debt among EMDEs is at a 50-year high, and Russia’s invasion of Ukraine has added major costs.

This, according to Malpass, leaves no room for fiscal support at a time when people are still suffering from Covid-related setbacks in health, education and nutrition.

He observed that over the next two years, per-capita income growth in EMDEs is expected to average only 2.8 percent—a full percentage point less than the 2010-2019 average.

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