World Bank Group President David Malpass said on Monday that the lender has revised its 2023 global growth outlook slightly upward to 2% from a January forecast of 1.7% but the slowdown from stronger 2022 growth will increase debt distress for developing countries.
Malpass told a media briefing that the upward revision was due to an improved outlook for China’s recovery from COVID-19 lockdowns, with growth now pegged at 5.1% this year compared to 4.3% in the bank’s January Global Economic Prospects report.
Advanced economies, including the U.S., are also doing a bit better than the World Bank anticipated in January, Malpass said.
However, the slowdown from stronger growth last year will increase debt distress for developing countries, Mr Malpass said.
But the departing World Bank chief warned that turmoil in the banking sector and higher oil prices could again put downward pressure on growth prospects later this year. A bank asset maturity mismatch will take some time to work through and banks are likely to pull back credit.
Malpass said that technical meetings this week with Chinese officials can help “break the ice” on potential movement on badly needed debt relief for poor countries.
Malpass said China also would be able to score some political points at a fairly low cost for its lending institutions.
“From the standpoint of their institutions, it’s not such a big amount,” Malpass said. “It beneficial to China to be making this movement” from both economic and political standpoints.