Global growth will slow this year and the situation could be made worse by the impact of the Covid-19 Omicron variant, which is spreading like wildfire on all continents, accentuating labor shortages and logistical problems, the world Bank.
The institution revised down its forecast for global GDP growth for 2022 by 0.2 percentage points, to 4.1% after the 5.5% registered in 2021.
But “the economic disturbances caused by Omicron they could further reduce global growth this year, from an additional 0.2 to 0.7 percentage points “to 3.9% or even 3.4%, the agency added.
In the worst case scenario “most of the impact would be felt in the first quarter of 2022, followed by a notable rebound in the second quarter, “he says.
“The Omicron variant shows us once again that the pandemic is still among us and we must learn to live with it,” Ayhan Kose, head of forecasts at the World Bank, said in an interview with AFP.
This fourth wave of Covid-19 currently causes fewer restrictions than that of 2020 “and if the outbreak were to diminish soon, the economic impact would be rather slight,” he said.
But “if the variant takes hold over time, with a high number of infections and pressures on the health system, then growth would be weaker,” he added.
In this case, labor shortages would increase, further disrupting global supply chains and fueling higher prices.
Faced with rampant inflation, the US central bank could brutally raise benchmark interest rates, raising the cost of borrowing for emerging countries, already subject to record debt.
In this context, business and household confidence could erode. Ultimately, consumption and trade flows, which are the engine of global growth, would be affected.
By 2022, world Bank it has already revised down world trade volume growth to 5.8% (-0.5 percentage points) after a 9.5% rebound last year.
United States and China
Ayhan Kose estimates that vaccination remains the key element. The threat of new, more contagious or serious variants will persist as long as a significant part of the world’s population remains unvaccinated.
“The proportion of the vaccinated population in many economies is projected to exceed 70% by mid-2022 but prospects remain uncertain in several countries,” especially in poor nations, notes the world Bank.
“Based on recent vaccination rates, only about a third of the population in low-income countries will have received a dose of the vaccine by the end of 2023,” laments the entity in its report.
The two largest world powers, the United States and China, are not spared from a sudden stop and the omicron threat, assures the world Bank.
US growth was revised down for 2022 to 3.7% (-0.5 percentage points) after 5.6% in 2021 (-1.2 percentage points).
The world Bank expects the official 10-year $ 1.2 trillion infrastructure spending plan, signed in November, to “give only a small boost to economic activity in the short term, and most of its effects will be felt after this year.” .
And the inflation persistent and even faster tightening of monetary policy could lead to weaker growth than expected. “
Chinese growth is estimated at 5.1% (-0.3 percentage points) compared to 8% (-0.5 percentage points) in 2021. China is slowing down “more than expected,” the institution points out.
“The possibility of a pronounced and prolonged slowdown in the heavily indebted real estate sector, and its possible effects on house prices, consumer spending and local government financing, constitutes a risk” for the Chinese economy, he concludes. the bank.
The International Monetary Fund will publish its forecast on January 25.