Ajit Karn
Washington: The World Bank said on Monday that a slowdown in China’s economy is expected to bring down global growth to its lowest level in this century. To avoid a “lost decade” of growth, the World Bank suggested taking steps.
The World Bank said in a statement that the world’s potential growth, which is its greatest long-term growth rate without causing inflation, will slow to just 2.2% per year on average this decade.
A number of things, like the lasting effects of the Covid-19 pandemic, the war in Ukraine, and the ongoing risks to the banking sector in Europe and the US, are slowing down the global economy, which the bank expects to grow by only 1.7% this year.
The Washington-based international lender thinks that China’s economy, which is growing at 5% per year, will help keep the world economy from going into a slump this year.
But as its growth slows in the coming years, it will be less able to keep the world economy going, the bank said.
“We’re used to China being the engine of the world economy, but that will have to change because China’s growth rate will slow down over time,” said Indermit Gill, Chief Economist of the World Bank, at a press meeting on Monday.
Then the question is, “What will we do instead of China?”
The bank says that the answer is to find a way to take advantage of the biggest structural changes that each country can make to keep the economy going.
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The bank study said that the global economy needed to make three key changes to help boost potential growth: invest more in money and people, work longer hours, and use more technology.
Gill said, “One country won’t take the place of China.” “We need to figure out what each country can do better.”
