World Bank Says Nations Must Adopt Policies to Boost Growth

Nations need to make changes to prevent an anticipated slump in global growth.

So said the World Bank in a report released Monday (March 27) that found average global potential GDP growth is expected to slow to 2.2% a year between 2022 and 2030 — a growth rate that is about one-third slower than that seen in the first decade of this century, according to a Monday press release.

“The ongoing decline in potential growth has serious implications for the world’s ability to tackle the expanding array of challenges unique to our times — stubborn poverty, diverging incomes and climate change,” World Bank Chief Economist and Senior Vice President for Development Economics Indermit Gill said in the release. “But this decline is reversible. The global economy’s speed limit can be raised — through policies that incentivize work, increase productivity and accelerate investment.”

The World Bank attributed the anticipated slowdown to the lasting effects of the COVID-19 pandemic, the Russian invasion of Ukraine and the faltering level of international economic integration, according to the report, “Falling Long-Term Growth Prospects: Trends, Expectations and Policies.”

To reverse the trend, the World Bank suggested that countries prioritize taming inflation, ensuring financial-sector stability and reducing debt; boost their investments in transportation, energy, agriculture, manufacturing and land and water systems; and cut the costs of shipping logistics and regulation.

It added that nations should capitalize on the digitally delivered services sector — which it said “could become the new engine of economic growth” — and increase labor force participation, according to the press release.

“We owe it to future generations to formulate policies that can deliver robust, sustainable and inclusive growth,” Ayhan Kose, lead author of the report and director of the World Bank’s Prospects Group, said in the release. “A bold and collective policy push must be made now to rejuvenate growth.”

In other recent news from the World Bank, the United States nominated former Mastercard CEO Ajay Banga in February to lead the organization.

Current World Bank President David Malpass said Feb. 15 that he would step down by June 30 after serving more than four years.

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