Washington/London: A new World Bank report has warned that the global economy was at risk of suffering the “Lost Decade” crisis in the wake of the looming economic recession and the banking crisis. According to the World Bank, the average growth rate of the world economy will remain at 2.2 per cent until 2030. Previously, the growth of the Japanese economy slowed during the ten years from 1991 to 2001. This period is internationally recognised as the ‘Lost Decade’.
The World Bank released a report titled ‘Falling Long-Term Growth Prospects’ on Monday. In this report, the global economy was forecast to slow down. “Most of the factors that contributed to the prosperity and progress of the world economy in the last three decades are gradually disappearing. In the first decade of this century, the average growth rate of the world economy was six per cent. However, the average growth rate from 2022 to 2030 will remain at one-third of this. Also, the world economy will grow at an average rate of 2.2 per cent during this time. It appears that the World Bank has drawn attention to the crisis of the ‘Lost Decade’.
The report predicts that developing economies will be hit the hardest. The World Bank has also expressed concern that the situation will become more serious if there is a new economic crisis or recession. World Bank Chief Economist Indermit Gill has said the ‘Lost Decade’ crisis is in the making for the global economy. Gill warned that this decline might affect the global economy’s ability to face various challenges. It includes factors like poverty, macroeconomic imbalances and climate change, said Gill.
Economic recession is always known to affect the growth rate. But the damage to the global economy due to the crisis in the banking sector will be greater than the recession’, World Bank economist Franziska Ohnsorge highlighted. Ayhan Kos, senior director of the World Bank, claimed that if the recession and the new economic crisis come together, the global economy will suffer long-term effects.
The World Bank report has drawn attention to the fact that the long period of economic development in the world economy has ended due to successive crises of the Corona pandemic and the Russia-Ukraine conflict. The report recommends that global policymakers make big and bold decisions to avoid a potential ‘Lost Decade’ crisis.
Countries worldwide should implement policies with sustainable development at their centre. It is necessary to implement ambitious initiatives to provide the required manpower. The World Bank report suggested that it was essential to increase productivity and investment.
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