World Bank Presents Discouraging Forecasts for 2030

The World Bank’s most recent global economic report indicates that a lack of efforts to recover growth could lead to the period of worst economic growth of the past three decades. 

The “Falling Long-Term Growth Prospects: Trends, Expectations, and Policies” aims to provide a well-developed assessment on the global economy. It analyzes long-term potential output growth rates, the aftermath of the COVID-19 pandemic and the Russian invasion of Ukraine, explained the World Bank via a press release. 

“A lost decade could be in the making for the global economy. The ongoing decline in potential growth has serious implications for the world’s ability to tackle the expanding array of challenges unique to our times: stubborn poverty, diverging incomes and climate change. But this decline is reversible. The global economy's speed limit can be raised, through policies that incentivize work, increase productivity and accelerate investment,” says Indermit Gill, Chief Economist and Senior Vice President for Development Economics, World Bank.

The report explained that the global economy could reach its “speed limit,” which the World Bank describes as the maximum long-term rate at which the economy can grow without sparking inflation. The World Bank warned that the recent crises could force the economy to a slump not seen in three decades by 2030. The report recommends ambitious policy pushes to boost productivity, labor supply, ramp up investment, trade and to exploit the potential of the services sector. 

The World Bank warns that almost all the economic forces that powered progress and prosperity in the last 30 years are failing, which has caused average global GDP potential forecasts to fall by almost a third in comparison to the 2000-2010 period. The World Bank forecasts growth in the next decade to stall at 2.2% a year. Developing economies will likely fall from 6% a year between 2000 and 2010 to 4% from 2020 to 2030. 

“We owe it to future generations to formulate policies that can deliver robust, sustainable and inclusive growth,” says Ayhan Kose, Director, World Bank’s Prospects Group.

Earlier this year, the World Bank forecasted that Mexico’s economy would grow 0.9% in 2023. In 2022, the country grew by 2.6%, surpassing the bank’s forecasts, as reported by MBN.