Lost decade could be in the making: World Bank on global economy

The World Bank, in a new report has warned that the global economy’s “speed limit” — the maximum rate of long-term growth without causing inflation — is set to decline to its lowest point in three decades by 2030.

As per World Bank, an ambitious policy shift is required to boost labour supply, productivity and investment which could reverse the trend.

"A lost decade could be in the making for the global economy," said World Bank chief economist Indermit Gill. The report, titled ‘Falling Long-Term Growth Prospects: Trends, Expectations, and Policies,’ gives an extensive analysis on the potential output growth rates in the aftermath of two significant global events — the COVID-19 pandemic and the Russian invasion of Ukraine.

The World Bank is also watching the development in the banking sector as rising interest rate and tightening the financial conditions could increase the borrowing cost for developing countries.

The report also mentions the need to reverse the expected broad-based slowdown in potential gross domestic product (GDP) growth to tackle climate change and reduce poverty