The World Bank on Tuesday lowered its global economic growth forecast to 4.1 percent in 2022 and to 3.2 percent in 2023, and warned that inflation, debt and income inequality could jeopardize the recovery of emerging market and developing countries, CNBC writes.

In its report titled “Global Economic Prospects,” the World Bank explained the downgrade in the global growth forecast by saying that more countries are now beginning to wind down unprecedented fiscal and monetary policy stimulus to deal with the effects of the coronavirus pandemic.

The World Bank has warned that persistent supply chain disruptions, rising inflationary pressures and heightened financial vulnerabilities in many countries around the world could increase the risk of a sharp slowdown in economic growth after a period of rapid recovery.

The International Monetary Fund is expected to be the next to release its updated global economic outlook on January 25.

Growth in advanced economies will slow from 5% in 2021 to 3.8% in 2022, which will be enough to bring aggregate output in these economies back to a pre-pandemic trend in 2023 and thus complete the cyclical recovery.

Meanwhile, China’s economic growth will decline to 5.1% in 2022, partly due to the lingering effects of the pandemic as well as additional regulatory tightening across industries.

However, emerging market and developing countries will be hit much harder by the pandemic. According to the bank’s report, their growth trajectories will not be strong enough to return investment and output to pre-pandemic levels by 2023. For now, developing countries are fighting inflation by raising interest rates.

Overall, growth in emerging market and developing economies is projected to slow from 6.3% last year to 4.6% in 2022, with output remaining below pre-pandemic levels for some small or heavily tourism-dependent economies. Another important feature of the bank’s new forecast was a focus on widening income inequality, exacerbated by the coronavirus pandemic.

The report points to data showing that 60% of surveyed households in developing countries lost income in 2020, with low-income countries and especially sub-Saharan Africa being hit hardest. Inflation is known to hit low-income workers the hardest and is now at levels not seen since 2008. Many emerging market and developing countries are cutting off support to the economy to curb inflation until the recovery in growth is complete.

The pandemic has also pushed total global debt to the highest level in half a century, which only complicates the task of establishing coordinated debt relief efforts. The World Bank called for “global cooperation” to help developing countries expand their financial resources for sustainable development. According to World Bank President David Malpass, if the omicron strain persists, it could further reduce global growth projections.

“Developing countries face serious long-term challenges from lower vaccination rates, global macroeconomic policies and debt burdens,” he said.

It is known that since the beginning of 2020, more than 300 million cases of the virus have been reported and more than 5.5 million people have died. The distribution of vaccines itself has not been equitable, with poorer countries struggling to get enough doses. Information published by Our World In Data showed that despite 9.49 billion doses of vaccine administered worldwide to date, only 8.9% of people in low-income countries received at least one dose.