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World Bank sees ‘sharp slowdown’ in global growth as pressures from COVID and inflation kick in | Economic news

The World Bank has warned of a “sharp slowdown” in global growth as threats from new COVID-19 variants and cost-of-living pressures are felt.

He also highlighted the risks of debt and income inequality, while highlighting in particular the risk for emerging and developing economies.

The warning came as separate figures showed inflation in the OECD, a group of 38 mostly developed countries, was at its highest level in 25 years amid soaring food prices and rising prices. energy.

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Inflation in the OECD area at its highest level in 25 years

Elsewhere, there were signs of continued pressure on global supply chains, with shipping giant Maersk saying the new year “had not started as we had hoped”, with new outbreaks taking hold. increased trade.

The World Bank report indicates that after a strong rebound in 2021 with growth estimated at 5.5%, global expansion is expected to slow sharply to 4.1% this year – revised down from a previous estimate by 4.3% – and 3.2% in 2023.

Global GDP declined by 3.4% in 2020 due to the pandemic.

The report highlighted the pent-up wave of demand after the lockdowns dissipated and the huge levels of support from governments and central banks around the world ended.

He said the rapid spread of the Omicron variant “indicates that the pandemic will likely continue to disrupt economic activity in the near term.”

In addition, slower growth in large economies such as the United States and China will hurt demand for what they buy in emerging and developing countries, he added.

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With many developing countries unable to afford to support their economies if needed, the report says new outbreaks of COVID, lingering tensions in the supply chain, inflationary pressures and high debt levels “could increase the risk of a hard landing “.

The coming period will see a growing divergence between the richest and the poorest countries, all advanced economies are expected to have achieved a full recovery in their production by 2023, but emerging and developing countries remain 4% below the pre-pandemic trend, he added.

World Bank President David Malpass said: “The global economy is simultaneously facing COVID-19, inflation and political uncertainty, with government spending and monetary policies in uncharted territory. “

Separate figures from the Organization for Economic Co-operation and Development (OECD) showed inflation in its 38 member countries at 5.8% in November, down from 5.2% in October, and the highest rate since May 1996.

In particular, the rise in prices in the United States were at a 39-year high of 6.8%.

In Britain, inflation reached a decade high of 5.1% in November.

The OECD area as a whole saw energy prices soar 27.7%, the highest rate since June 1980, while food price inflation reached 5.5%.

Among the price pressure factors is the combination of sustained demand and a still struggling supply chain due to the pandemic.

Thousands of sea containers at the Port of Felixstowe in Suffolk, as shipping giant Maersk has said, has said it is diverting ships from UK ports to unload elsewhere in Europe due to a build-up of cargo.  Picture date: Wednesday October 13, 2021.
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Maersk said store wait times in Felixstowe were over a week

Maersk, the world’s largest shipping company, warned in november that there was “little visibility” as to when the bottlenecks would end.

In a pessimistic notice to customers on Tuesday, he said: “Unfortunately, 2022 has not started as we had hoped.

“The pandemic is still strong and unfortunately we are seeing new epidemics affecting our ability to move your cargo.

“General illness remains high as key ports in key regions experience further peaks of COVID-19.

“We recognize that this causes delays in our customers’ supply chains and mitigating these disruptions is of the utmost importance to us.”

In Europe, delays at the port of Antwerp were reduced from ten days to two days while in Felixstowe, Great Britain, waiting times for ships at berth remained at over a week.

The longest wait times for ships to drop off or pick up cargo were at Long Beach in Los Angeles, up to 45 days.

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