Higher interest rates and the effects of the recent banking crisis will sharply slow growth in the world’s largest economies. The World Bank. AND OECD assesses that the global economy is on the path to recovery, but warns that the road to achieving strong and sustainable growth is a long one.

In particular, according to World Bank estimates, developed economies – the US, Japan and the eurozone – will grow by only 0.7% in 2023 from 2.6% in 2022. Japan’s GDP is expected to grow by less than 1% this year. US GDP is expected to slow to 0.8% in 2024 on the back of higher interest rates.

The World Bank estimates that the US, Japan and the eurozone will grow by just 0.7% in 2023 from 2.6% in 2022.

In addition, the bank forecasts that global economic growth will slow to 2.1% in 2023, compared to 3.1% last year. In emerging market and developing economies, GDP is projected to increase slightly by 0.4% compared to the January forecast, corresponding to a growth rate of 4%. However, World Bank chief economist Intermeet Gill says that excluding China, growth rates for emerging economies will be less than 3%. This is one of the weakest growth rates in the past five decades, Gill said.

Fiscal problems are another blow to low-income countries, 14 out of 28 of which currently have problem debt or face a high risk of debt default. Per capita income in a third of these countries is expected to remain at 2019 levels in 2024. However, central banks around the world continue to raise interest rates to fight inflation.

According to the OECD, lower energy prices and headline inflation, easing supply restrictions and restarting the Chinese economy, combined with high employment and relative household financial resilience, are contributing to a projected recovery, which, however, will be weak given past data.