World News | World Bank dims outlook for global economy in face of higher interest rates

WASHINGTON, June 6 (AP) — The global economy is likely to slow sharply this year due to high interest rates, the fallout from Russia’s invasion of Ukraine and lingering fallout from the coronavirus pandemic.

That’s the latest outlook from the World Bank, the 189-country anti-poverty agency, which estimates the international economy will grow just 2.1% in 2023 after growing 3.1% in 2022.

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Still, the bank’s latest global economic outlook report on Tuesday marked an upward revision to its January forecast.

The estimate sees global growth of just 1.7% this year.

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The Fed and other major central banks have been aggressively raising interest rates in response to a revival in inflation triggered by a stronger-than-expected rebound from the pandemic recession, persistent supply shortages and energy and food price shocks from the Ukraine war.

But the global economy has proven surprisingly resilient in the face of higher borrowing costs, with the World Bank predicting growth will accelerate to 2.4% in 2024.

Despite the Federal Reserve raising its benchmark interest rate 10 times in the past 15 months, the US continued to generate surprisingly strong job growth — employers added 339,000 workers in May, far exceeding economists’ forecasts.

In a report on Tuesday, the World Bank raised its forecast for U.S. economic growth this year to 1.1%.

Although the growth was weak, it was still more than double the growth expected by the World Bank in January.

The euro zone, which represents the 20 countries that use the euro, is expected to post collective growth of 0.4 percent this year.

It also marks a slight escalation: In January, the World Bank had projected no growth in the euro zone at all this year. Europe, which is struggling with rising energy prices due to the war in Ukraine, is reeling from an unseasonably warm winter that has reduced demand for heating.

The World Bank raised its outlook for China to 2023 after Beijing eased its strict zero-COVID policy late last year, which restricted travel and hit the Chinese economy.

The world’s second-largest economy is now expected to grow 5.6% in 2023, up from 3% last year.

The World Bank expects Japan’s growth to slow to 0.8% this year from 1% in 2022.

It expects growth in India to slow to a still strong 6.3 percent from 7.2 percent last year.

The bank forecasts a significant slowdown in global trade this year. It expects prices of energy and other commodities to fall sharply this year and next. (Associated Press)

(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)