With economies across the world struggling to recover from the pandemic, global growth rates are expected to slow for the next two years. The World Bank forecasts growth rates slowing to 4.1 percent in 2022 and then 3.2 percent in 2023. In its latest report, the bank expressed concern for the “notable deceleration” in major economies such as China and the US.
Both the US and China, have suffered severe dents in their economies throughout the pandemic, although both remain the two economic powerhouses of the globe.
The World Bank also warned many countries that do not have financial support or domestic infrastructure, could be at risk of a “hard landing” in the short-term.
While some advanced economies will emerge from the pandemic with the ability to recover previous growth rates, the World Bank warned emerging economies will suffer growth rates falling from 6.3 percent in 2021, to 4.4 percent in 2023.
For vulnerable economies, they will be 7.5 percent below pre-pandemic levels.
World Bank Group President David Malpass said: “The world economy is simultaneously facing COVID-19, inflation, and policy uncertainty, with government spending and monetary policies in uncharted territory.
“Rising inequality and security challenges are particularly harmful for developing countries
“Putting more countries on a favourable growth path requires concerted international action and a comprehensive set of national policy responses.”
The report also issued a warning over rising inflation rates across the world, which is running at its highest level in advanced economies since 2008.
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The report comes amid a period of uncertainty over China’s property market.
China Evergrande is one of the largest in the world, and one of the largest in the country’s property market, which is estimated to be worth £40trillion and is 29 percent of the state’s total GDP.
Last month, Evergrande was declared to have missed a bond repayment which was valued at £61million.
The company faces further repayments this year and has departed from its headquarters in Shenzhen to cut costs.
If Evergrande and other companies in China were to collapse, it could spook lenders across the world system.
Like the 2008 crash, it may cause lenders to withhold funds and question whether organisations could make repayments, thus causing a credit crunch.
Speaking to Express.co.uk, Dr Marco Metzler from Deutsche Marktscreening Agentur (DMSA), claimed the collapse of such a large company could spark the collapse of the world financial market.
He previously said: “This is the first domino of the collapse of the market.
“It will be even worse than the 2008 financial crash.”