The World Bank reduced its estimate regarding the growth of Romania's economy

The World Bank (WB) reduced its estimate for Romania's economic growth in 2023 to 1.8%, 0.8 percentage points below the forecast released in June last year, according to the institution's latest report - "Global Economic Perspectives" , January 2024 edition, published this week.

For 2024, the BM reduced its estimate by 0.6 percentage points, to 3.3%, and for 2025 - by 0.3 percentage points, to 3.8%.

According to the cited source, the global economy is expected to register the worst half-decade growth of the last 30 years. The report notes that global expansion will slow for the third straight year in 2024 to 2.4% from 2.6% in 2023.

The same source shows that growth will pick up slightly to 2.7% in 2025, although the acceleration over the five-year period will remain nearly three-quarters of a percentage point below the average rate of the 2010s.

The World Bank warns that despite the global economy proving resilient to recessionary risks in 2023, heightened geopolitical tensions will present new challenges in the near term, causing most economies to grow more slowly in 2024 and 2025 compared to with the previous decade.

Ayhan Kose, deputy chief economist of the World Bank, said: "World economic growth recorded in the period 2020-2024 will be weaker than that recorded in the years around the global financial crisis of 2008-2009, the Asian financial crisis of the end of the years "90 and the slowdown from the beginning of the 2000s". He also stated for CNBC: "We have a war in Eastern Europe, the Russian invasion of Ukraine. We have a severe conflict in the Middle East. The escalation of these conflicts could have significant implications on energy prices, which could have an impact on inflation, as well as on economic growth".

"In the absence of a major change in direction, the decade of 2020 will go down in history as the decade of wasted opportunities", warned the chief economist of the World Bank, Indermit Gill.

If the economic decline caused by the pandemic in 2020 is excluded, this year's growth would be the weakest since the financial crisis of 2009, the World Bank points out.

• BM urges the acceleration of investments for the transition to clean energy

The World Bank points out that one way to stimulate economic growth, especially in emerging and developing countries, would be to accelerate the annual investments of approximately 2,400 billion dollars needed for the transition to clean energy and adaptation to climate change.

The financial institution analyzed the effects of an acceleration of investments by at least 4% per year and found that this would boost the growth of per-capita incomes, production in the manufacturing and service sectors and, at the same time, would improve the countries' fiscal position. But such accelerations require comprehensive reforms, including structural reforms to expand cross-border trade and financial flows, as well as improvements in the areas of fiscal and monetary policies.

• Developing economies, the most affected

Regionally, economic growth this year is expected to weaken the most in North America, Europe and Central Asia and Asia Pacific, mainly due to slower growth in China.

According to WB forecasts, a slight improvement is expected for Latin America and the Caribbean, respectively more important increases in the Middle East and Africa. However, developing economies will be most affected in the medium term, as sluggish global trade and tight financial conditions weigh heavily on growth.

"Short-term growth will remain weak, leaving many developing countries, especially the poorest, stuck in a trap: with crippling levels of debt and poor access to food for nearly one in three people," he pointed out. Indermit Gill.

Developing economies are expected to grow by 3.9% in 2024, more than a percentage point below the average of the previous decade.

By the end of the year, people in about one in four developing countries and about 40% of low-income countries will still be poorer than they were on the eve of the Covid-19 pandemic in 2019, the WB said.

According to the quoted source, the world is failing in its goal of making the 2020s "a transformative decade" in the fight against extreme poverty, major communicable diseases and climate change.

According to the quoted source, the world is failing in its goal of making the 2020s "a transformative decade" in the fight against extreme poverty, major communicable diseases and climate change. But, according to the WB, there is an opportunity to change the trend if governments act quickly to increase investment and strengthen fiscal policy frameworks.

Ayhan Kose concludes: "Investment booms have the potential to transform developing economies and help them accelerate the energy transition and achieve a wide variety of development goals. To trigger such booms, developing economies must implement comprehensive policy packages to improve fiscal and monetary frameworks, expand cross-border trade and financial flows, improve the investment climate, and strengthen the quality of institutions. It's hard work, but many developing economies have done it before. By doing so again, they will help mitigate the expected slowdown in potential growth for the rest of this decade."