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Context

• In its latest Global Economic Prospects report the World Bank recently cut its 2022-23 (FY23) real gross domestic product (GDP) growth forecast for India to 7.5 per cent, from 8 per cent.
• This is on the back of inflationary pressures, supply-chain pressures, and geopolitical tensions due to Russia’s invasion of Ukraine.

Key Highlights:

Regional Outlook

• East Asia and Pacific: Growth is projected to decelerate to 4.4% in 2022 before increasing to 5.2% in 2023.
• Europe and Central Asia: The regional economy is expected to shrink by 2.9% in 2022 year before growing by 1.5% in 2023.
• Latin America and the Caribbean: Growth is projected to slow to 2.5% in 2022 and 1.9% in 2023.
• Middle East and North Africa: Growth is forecast to accelerate to 5.3% in 2022 before slowing to 3.6% in 2023.
• South Asia: Growth is projected to slow to 6.8% in 2022 and 5.8% in 2023.
• Sub-Saharan Africa: Growth is forecast to moderate to 3.7% in 2022 and rise to 3.8% in 2023.

Overview:

• Russia’s invasion of Ukraine and its effects on commodity markets, supply chains, inflation, and financial conditions have steepened the slowdown in global growth.
• One key risk to the outlook is the possibility of high global inflation accompanied by tepid growth, reminiscent of the stagflation of the 1970s. This could eventually result in a sharp tightening of monetary policy in advanced economies, which could lead to financial stress in some emerging market and developing economies.
• A forceful and wide-ranging policy response is required to boost growth, bolster macroeconomic frameworks, reduce financial vulnerabilities, and support vulnerable groups.

About Global Economic Prospects

• Global Economic Prospects (GEP) is a flagship report of the World Bank Group, which examines global economic developments and prospects, with a special focus on emerging market and developing economies, on a semi-annual basis (in January and June).
• Each edition includes analytical pieces on topical policy challenges faced by these economies.

World Bank cuts India's FY23 GDP forecast to 7.5% amid rising inflation | Business Standard News (business-standard.com)

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