WASHINGTON, United States (CMC) – The World Bank says following a strong rebound in 2021, the global economy is entering a pronounced slowdown amid fresh threats from the coronavirus (COVID-19) variants and a rise in inflation, debt, and income inequality that could endanger the recovery in emerging and developing economies.

The bank in its latest Global Economic Prospects report, noted that global growth is expected to decelerate markedly from 5.5 per cent in 2021 to 4.1 per cent in 2022 and 3.2 per cent in 2023 as pent-up demand dissipates and as fiscal and monetary support is unwound across the world.

It said the rapid spread of the Omicron variant indicates that the pandemic will likely continue to disrupt economic activity in the near term. In addition, a notable deceleration in major economies including the United States and China will weigh on external demand in emerging and developing economies.

“The world economy is simultaneously facing COVID-19, inflation, and policy uncertainty, with government spending and monetary policies in uncharted territory. Rising inequality and security challenges are particularly harmful for developing countries,” said World Bank Group President David Malpass.

“Putting more countries on a favourable growth path requires concerted international action and a comprehensive set of national policy responses.”

Regarding Latin America and the Caribbean (LAC), the Washington-based financial institution noted that growth in the LAC region rebounded to an estimated 6.7 per cent in 2021, driven by favourable external conditions and pandemic-related developments.

It said strong demand in key export destinations – the United States and China – high commodity prices, and continued high remittances to Central American and Caribbean countries were also supportive of growth in 2021.

The World Bank said growth in most Caribbean countries is projected to accelerate in 2022, on account of the expected timing of the recovery in international tourist arrivals.

But it said the risks to growth in the LAC include spikes in COVID-19 cases, financing and debt-related stress, and disruptions from extreme weather events and natural disasters.

“The durability of economic recovery in LAC, as elsewhere, depends on the control of the pandemic. COVID19 outbreaks, including those triggered by new variants of the virus, remains a downside risk even in countries with high vaccination rates.”