Business
World Bank warns global economy could tip into recession in 2023
The World Bank slashed its 2023 growth forecasts on Tuesday to levels teetering on the brink of recession for many countries as the impact of central bank rate hikes intensifies, Russia’s war in Ukraine continues, and the world’s major economic engines sputter.
The development lender said it expected global GDP growth of 1.7% in 2023, the slowest pace outside the 2009 and 2020 recessions since 1993. In its previous Global Economic Prospects report in June 2022, the bank had forecast 2023 global growth at 3.0%, Reuters reported.
It forecast global growth in 2024 to pick up to 2.7% — below the 2.9% estimate for 2022 — and said average growth for the 2020-2024 period would be under 2% — the slowest five-year pace since 1960.
The bank said major slowdowns in advanced economies, including sharp cuts to its forecast to 0.5% for both the United States and the euro zone, could foreshadow a new global recession less than three years after the last one.
“Given fragile economic conditions, any new adverse development — such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic or escalating geopolitical tensions — could push the global economy into recession,” the bank said in a statement accompanying the report.
The bleak outlook will be especially hard on emerging market and developing economies, the World Bank said, as they struggle with heavy debt burdens, weak currencies and income growth, and slowing business investment that is now forecast at a 3.5% annual growth rate over the next two years — less than half the pace of the past two decades.
“Weakness in growth and business investment will compound the already devastating reversals in education, health, poverty and infrastructure and the increasing demands from climate change,” World Bank President David Malpass said in a statement.
China’s growth in 2022 slumped to 2.7%, its second slowest pace since the mid-1970s after 2020, as zero-COVID restrictions, property market turmoil and drought hit consumption, production and investment, the World Bank report said. It predicted a rebound to 4.3% for 2023, but that is 0.9 percentage-point below the June forecast due to the severity of COVID disruptions and weakening external demand.
The World Bank noted that some inflationary pressures started to abate as 2022 drew to a close, with lower energy and commodity prices, but warned that risks of new supply disruptions were high, and elevated core inflation may persist. This could cause central banks to respond by raising policy rates by more than currently expected, worsening the global slowdown, it added.
The bank called for increased support from the international community to help low-income countries deal with food and energy shocks, people displaced by conflicts, and a growing risk of debt crises. It said new concessional financing and grants are needed along with the leveraging of private capital and domestic resources to help boost investment in climate adaptation, human capital and health, the report said.
The report comes as the World Bank’s board this week is expected to consider a new “evolution road map” for the institution to vastly expand its lending capacity to address climate change and other global crises. The plan will guide negotiations with shareholders, led by the United States, for the biggest revamp in the bank’s business model since its creation at the end of World War Two.
The Ministry of Interior says that Afghanistan has started exporting goods to Turkey via the Herat-Khaf railway line.
In a post on X, the ministry said: “Afghanistan’s exports to Turkey started in a calm atmosphere through the Herat-Khaf railway line.”
The ministry added that one train will run daily for a month and then two trains will run daily.
According to the ministry, the security of Khaf-Herat railway line is provided by the guards of the National Public Protection Agency.
Khaf-Herat railway project not only connects Iran and Afghanistan by rail, but also completes a 2,000-kilometer route along the east-west rail corridor from China, through Uzbekistan, to Afghanistan, to Iran, and on to Turkey and Europe.
As a landlocked country, this railway network will provide a safe route to connect with Europe via Iran’s railway network and Iran’s southern ports.
This railway line is strategic for trade between Iran and Afghanistan and will allow six million tons of goods to be sent between the two countries.
A joint expo between Afghanistan and Kazakhstan will be held in Kabul in the next four days, officials said on Sunday.
Officials of the Ministry of Industry and Commerce said that the two-day expo will be held for the purpose of expanding and strengthening trade relations between the two countries.
“This expo will be held as a follow-up of the Kazakh-Afghan international expo, which was held in the city of Astana, Kazakhstan, with the participation of a large delegation of the government and the private sector of the Islamic Emirate of Afghanistan,” Abdulsalam Javad Akhundzadeh, the spokesman of the Ministry of Industry and Commerce, said.
“At this expo, domestic products from different sectors of Afghanistan and the Republic of Kazakhstan will be put on display for two days.”
According to officials, 40 large Kazakh companies, and 40 large Afghan companies will exhibit their products.
Mohammad Saber Latifi, head of the Afghanistan International Expo Center, said that fruits, minerals and commercial services will be displayed at the expo.
During the expo, various memorandums of understanding for the trade of goods are also expected to be signed by companies.
The absence of GDP growth coupled with declining external financing avenues for off-budget expenditures paint a bleak picture of Afghanistan’s economic prospects, the World Bank said.
After a severe 20.7 percent GDP contraction in 2021, the Afghan economy contracted further by 6.2 percent in 2022, the bank said in a report.
“While Afghanistan’s agricultural and subsistence economy, including illicit opium production, provided some resilience in rural areas, higher prices, reduced demand, lower employment, and disruptions to services had severe impacts across the country,” it said.
The proportion of households that did not have enough income to meet basic food needs more than doubled from 16 percent to 36 percent in this period, according to the bank.
In the context of deep concerns about the policies of the Islamic Emirate of Afghanistan (IEA), including restrictions imposed on women and girls, the international community, including the World Bank, recalibrated its approach to supporting Afghanistan: first to providing humanitarian support and then to providing off-budget support for basic service delivery and livelihoods.
However, IEA moved to restore domestic revenues, which reached $2.2 billion or 15 percent of GDP in 2022. “Nevertheless, overall economic activity remained depressed, unemployment stayed high, and the banking sector was dysfunctional due to constraints on international transfers and concerns about liquidity and solvency.”
World Bank said that Afghanistan’s economic outlook remains uncertain, with the threat of stagnation looming large until at least 2025. “This economic stagnation will deepen poverty and unemployment, with job opportunities expected to decrease and food insecurity expected to increase.”
The bank noted that for a sustainable future, Afghanistan needs to focus on its comparative advantages, particularly in the agricultural and extractive sectors. Agriculture could be a key driver of growth and poverty reduction, with the potential to create jobs, it added.
North Korea officials visit Iran in a rare public trip
Russia’s special envoy meets with IEA ministers, discusses bilateral issues
Tahawol: US State Dept’s criticism of human rights violations in Afghanistan discussed
Saar: Afghanistan’s economic situation and WFP’s concerns discussed
Afghans in Europe Union members meet with ministers of defense, mining
Dead body of Quran-burner found in Norway
ATN secures rights to produce, broadcast second season of KPL
UN expert says Israel has committed genocide in Gaza, calls for arms embargo
IPL: RCB register first win against Punjab Kings
IPL: Mumbai Indians fall short by just six runs in Gujarat match
Tahawol: US State Dept’s criticism of human rights violations in Afghanistan discussed
Saar: Afghanistan’s economic situation and WFP’s concerns discussed
Tahawol: Muttaqi Meets Iran Envoy Qomi
Saar: Role of science in development of society discussed
Tahawol: OIC delegation trip to Kabul discussed
-
Sport5 days agoRashid Khan threatens BBL pullout after Australia postpones Afghanistan T20I series
-
Business5 days agoCommerce ministry inks 10 MoUs to boost development of small and medium-sized businesses
-
Latest News5 days agoOver 6,000 acres of land cleared of poppies in Badakhshan
-
Sport4 days agoAfghanistan Champions League kicks off with grand opening ceremony
-
Latest News3 days agoPakistan’s frontiers minister stresses ‘dignified’ return of Afghan refugees
-
Regional4 days agoIran’s foreign minister downplays drone attack, says Tehran investigating
-
Latest News5 days agoTen people killed by floods in Helmand
-
Business4 days agoAfghanistan’s economic prospects are bleak: World Bank