World Bank downgrades global growth to 4.1% in 2022, upgrades Egypt’s to 5.5%

Doaa A.Moneim , Tuesday 11 Jan 2022

Global GDP growth is projected to slow down significantly in 2022 to 4.1 percent in 2022 and 3.2 percent in 2023, down from 5.5 percent recorded in 2021, the World Bank announced on Tuesday


In its Global Economic Prospects Report, the World bank attributed such a markedly growth deacceleration to the fresh threats from COVID-19 variants as well as the rise in inflation, debt, and income inequality that could hinder the recovery in emerging and developing economies.

For Egypt, the World Bank upgrades its forecasts for Egypts real GDP growth to 5.5 in FY2021/22, while maintaining Egypts outlook for FY222/23 at the same rate of 5.5 percent.

“The Arab Republic of Egypt's economy grew at a faster rate than expected into fiscal year 2020/2021, benefiting from robust consumption demand, growing remittances, and contained inflation relative to recent history,” the report explained.

It also noted that the country’s improved external demand from major trading partners, an expansion of the information and communications technology and gas extractives sectors, and gradual improvements in tourism would drive its recovery.

Addressing the Middle East and North Africa (MENA) region outlook, the report raised the region’s real GDP forecasts to 4.4 percent in 2022, up from 4.2 percent projected in October, before deaccelerating to 3.4 percent in 2023.

It also projected the gap in average per capita income between MENA and advanced economies to widen during 2022 and 2023.

However, the report pointed out to a bunch of risks that could hinder the region’s recovery process. Further COVID-19 outbreaks, social unrest, high debt in some economies, and conflict are among those risks.

“With less than two-fifths of the population of MENA fully vaccinated, concentrated in the region’s high-income economies, economic disruptions related to the pandemic remain a major risk,” the report explained.

Moreover, changes to oil prices could undermine activity in the region with gains and losses accruing differently to oil importers and exporters.

The report also said that underinvestment in the sector may limit the ability of oil exporters to take advantage of high oil prices.

Meanwhile, the report expected the rapid spread of Omicron variant to undermine global demand and lead to a retrenchment in oil prices.

On the other hand, the rising frequency of natural disasters linked to climate change threats is predicted to undermine lives and livelihoods in MENA, according to the report, which stressed that rising temperatures would reduce growing areas for agriculture and yields and exacerbate already-scarce water resources, undermining food security, forcing migration, lowering labor productivity, and raising the likelihood of conflict over time.

For emerging and developing economies, the report expected their GDP growth to drop severely to 4.6 percent in 2022, down from 6.3 percent in 2021, and to continue its downturn to reach 4.4 percent in 2023.

While the report expected all advanced economies to achieve a full output recovery by 2023, output in emerging and developing economies will remain 4 percent below its pre-pandemic trend.

Additionally, output of fragile and conflict-affected economies will be 7.5 percent below its pre-pandemic trend, and output of small island states will be 8.5 percent below, according to the report.


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