World Bank Lowers Global GDP Growth Rate Forecasts

By Tom Burnett CFA
On January 12, 2022, the World Bank issued its global growth forecast update, following its previous set of estimates issued in June 2021. The Bank issues two sets of forecasts in June and January of each year.
The Bank now sees world GDP growth of 4.1% in 2022, down from its June forecast of 4.3%. The current estimate for 2021 is now 5.5%, compared to an estimate of 5.7% in its June forecast. In 2020, due to the Covid-19 outbreak, world GDP declined by 3.4%. The Bank identifies three main reasons for its reduced 2022 expectations—the spread of Covid variants, the supply chain transportation delays, and the growing risk of pressures from inflation.
Looking at the U.S. economy, the Bank now sees GDP growth of 3.7% in 2022, down from a forecast of 4.2% growth in its earlier June report. The 2021 estimate is now plus 5.6%, down from an estimate of 6.8% in the June report. Looking ahead, the Bank sees GDP growth of 2.3% in 2023.
In the Euro region, the Bank sees growth of 4.2% in 2022, down from 4.4% in the June forecast. The outlook for 2023 is now growth of just 2.1%.
China is seen to have the most robust economy. Even in 2020, China’s GDP grew by 2.2% when the U.S. economy was declining by 3.4%. The 2021 recovery in China was very strong with growth of 8.0%. The Bank estimates that China will show growth of 5.1% in 2022, down from an estimate of 5.4% in the June report.
World trade volumes fell by 8.2% in 2020 then recovered by 9.5% in 2021. The Bank now expects that in 2022 world trade volumes will grow by 5.8%, down from its estimate of 6.3% in the June report.
Tom Burnett CFA is Director of Research