WORLD BANK / GLOBAL ECONOMIC FORECAST

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Global growth has slowed sharply, and the risk of financial stress in emerging market and developing economies is intensifying amid elevated global interest rates, according to the World Bank’s latest Global Economic Prospects report. WORLD BANK
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STORY: WORLD BANK / GLOBAL ECONOMIC FORECAST
TRT: 3:50
SOURCE: WORLD BANK GROUP
RESTRICTIONS: PLEASE CREDIT WORLD BANK GROUP ON SCREEN
LANGUAGE: ENGLISH / NATS

DATELINE: 5 JUNE 2023, WASHINGTON, DC, USA

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Shotlist

1. Graphic, Global Growth Projection
2. SOUNDBITE (English) Ayhan Kose, Deputy Chief Economist, World Bank Group:
“Global growth is slowing sharply in a synchronized fashion. This year 70 percent of countries around the world will see weaker growth relative to last year. We are expecting global growth to go down to 2 percent this year. It was 3 percent last year.”
3. Wide shot, exterior, World Bank Group Headquarters
4. SOUNDBITE (English) Ayhan Kose, Deputy Chief Economist, World Bank Group:
“For developing economies, weak growth translates into, of course, weaker income prospects. By the end of 2024, 30 percent of emerging market and developing economies will have per capita income still lower than what they had prior to the pandemic in 2019. Many of these economies won’t see catch-up in terms of their income with advanced economy income levels.”
5. Med shot, interior, World Bank Group Headquarters
6. SOUNDBITE (English) Ayhan Kose, Deputy Chief Economist, World Bank Group:
“The debt situation has been becoming worse in terms of developing economies’ ability to pay back debt. Interest rates have increased dramatically. And because of this, of course, the banking stress financing conditions get even tighter at the global level. So from 2000 to 2019, we saw only 19 sovereigns defaulted. Since 2020, we have already seen 14 countries defaulting. So we have a real debt crisis in our hands.”
7. Graphic, World Bank Group Global Economic Prospects
8. SOUNDBITE (English) Ayhan Kose, Deputy Chief Economist, World Bank Group:
“Rising interest rates have significant implications for emerging market and developing economies, especially those with weaker credit ratings and, of course, larger vulnerabilities. We downgrade our forecasts in emerging market and developing economies with larger vulnerabilities. In an environment where you have weak growth and tighter financial conditions, those economies are affected more as interest rate hikes take place.”
9. Wide shot, exterior, World Bank Group Headquarters
10. SOUNDBITE (English) Ayhan Kose, Deputy Chief Economist, World Bank Group:
“Fiscal challenges in low-income countries are formidable, and they are chronic in the sense that whether you look at the revenue side, whether you look at the expenditure side, you have persistent challenges. On the revenue side, revenues account for only 20 percent of GDP, and that has been the case over the past decade. These economies need to expand the revenue base. There are growing spending pressures. They need to allocate more for education. They need to allocate more for health to make progress in development objectives. And they are unable to do that because of narrow fiscal space. And of course, these fiscal challenges translate into weaker fiscal positions, and they translate into larger debt problems.”
11. Wide shot, Kose, production staff
12. Close up, Kose, monitor

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Storyline

Global growth has slowed sharply, and the risk of financial stress in emerging market and developing economies (EMDEs) is intensifying amid elevated global interest rates, according to the World Bank’s latest Global Economic Prospects report.

Global growth is projected to decelerate from 3.1 percent in 2022 to 2.1 percent in 2023.

In EMDEs other than China, growth is set to slow to 2.9 percent this year from 4.1 percent last year.

These forecasts reflect broad-based downgrades.

In addition, the report provides a comprehensive assessment of the fiscal policy challenges confronting low-income economies.

These countries are in dire straits.

Rising interest rates have compounded the deterioration in their fiscal positions over the past decade. Public debt now averages about 70 percent of GDP.

Interest payments are eating up a rising share of limited government revenues.

14 low-income countries are already in, or at high risk of, debt distress.

Spending pressures have risen in these economies.

Adverse shocks such as extreme climate events and conflict are more likely to tip households into distress in low-income countries than anywhere else because of limited social safety nets.

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24727
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WORLD BANK
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unifeed230606e
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3051472
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3051472