World Bank Group President David Malpass has revealed a minor increase in the global growth outlook for 2023, adjusting the forecast from 1.7% in January to 2%. Nonetheless, he warned that the deceleration after robust growth in 2022 might worsen debt problems for developing countries.
The upward revision is attributed to China's enhanced recovery from COVID-19 lockdowns, with this year's growth now projected at 5.1%, compared to the 4.3% prediction in January's Global Economic Prospects report. Advanced economies, including the U.S. and Europe, are also outperforming expectations from January, coinciding with the World Bank and International Monetary Fund's Spring Meetings.
However, Malpass cautioned about potential disruptions in the banking sector and the effects of escalating oil prices on growth prospects during the second half of 2023. He noted that addressing bank asset maturity mismatches could take time, possibly resulting in limited credit for businesses and slowed growth.
In this week's technical meetings with Chinese officials, Malpass expressed optimism for headway on vital debt relief for impoverished nations. He also suggested that China could reap political benefits at a relatively low cost to its lending institutions by offering such assistance. Both Malpass and IMF Managing Director Kristalina Georgieva recognized the challenges posed by the slow medium-term growth outlook, estimated by the IMF to be below 3% this year and approximately 3% for the next five years. Malpass stressed the importance of higher growth for job creation and curbing economic migration from impoverished countries, urging a reversal of the net outflow of capital from developing nations as interest rates standardize. Georgieva called for an increased emphasis on strategies for higher growth in discussions concerning immediate priorities, such as price and financial stability. The IMF plans to release its latest economic forecasts on Tuesday, which usually vary slightly from the World Bank's due to differences in exchange rate calculation methodologies.