World Bank Brightens View of Global Growth This Year, Downgrades 2024

WASHINGTON—The World Bank sees better global economic growth than previously estimated in 2023, thanks to resilient U.S. consumer spending and China’s faster-than-expected reopening in the early part of the year.

The bank still expects slowing growth in the second half of this year and a muted expansion into next year, according to its forecast released Tuesday. It warned that stubbornly high inflation and interest-rate increases are weighing on economic activity around the world, particularly in developing countries.

The bank now projects the world’s economy will grow 2.1% this year, up from the 1.7% pace it forecast in January. The new estimate still marks a slowdown from last year’s 3.1% expansion.

“The global economy remains in a precarious state,” the multilateral lender said in the latest issue of its semiannual Global Economic Prospects report. The bank noted overlapping negative shocks from the pandemic, Russia’s invasion of Ukraine and the sharp tightening of monetary policy.

The bank forecasts growth of 2.4% next year—a pickup from this year, but not as much as its January estimate of 2.7%.

The somewhat improved 2023 outlook is consistent with other data showing the U.S. and much of Europe have so far avoided a recession that many forecasters expected heading into 2023.

Better-than-expected economic performances at the start of the year have helped keep inflation stubbornly high in many advanced economies. As a result, policy makers in the U.S. and other rich nations have continued to raise interest rates to tame inflation. The World Bank says that the impact is felt particularly acutely in many developing nations.

For many lower-income countries, higher rates are crimping growth, slowing investment and intensifying the risk of financial crises, the bank said.

“The possibility of more widespread banking turmoil and tighter monetary policy could result in even weaker global growth,” the World Bank said. Rapid U.S. rate increases since early 2022 have created a pocket of volatility in the otherwise stable banking system, contributing to the failures of Silicon Valley Bank, Signature Bank and First Republic Bank earlier this year.

The drag on economic activities from tighter monetary policy is growing more pronounced in interest-rate-sensitive sectors such as business and residential investments.

Emerging markets and developing economies outside of China are expected to see their growth slow to 2.9% this year from 4.1% last year.

“Besieged by high inflation, tight global markets and record debt levels, many countries are simply growing poorer,” said Indermit Gill, World Bank chief economist.

Some of the world’s poorest nations are particularly vulnerable. Many of their governments have been forced to spend growing shares of their limited resources to pay higher interest on their debts, putting their finances in precarious positions and raising risks of financial dislocations, the World Bank said.

The average ratio of debt to gross domestic product among the 28 poorest countries, those with per capita incomes below $1,085 annually, has grown to 67% from 36% in 2011. These countries spend just 3% of their revenues to support their poorest citizens.

Gill urged central banks, particularly those from rich countries, to communicate their intentions as early and clearly as possible to avoid the disruptive spillover to global financial markets. Monetary officials from emerging markets may need to tighten their own policies to limit capital outflow and currency depreciation, which could fuel inflation, he said.

There are Corvette fans for whom the base US$68,300 car is plenty powerful enough. After all, it produces 495 horsepower and can reach 60 miles per hour in 2.9 seconds. But hold on, there’s also the approximately US$115,000 Z06—with 670 horsepower and able to reach 60 in 2.6 seconds. These split seconds are important for busy people—and for marketing claims. And if that’s not enough go power, there’s the even more formidable 900-horsepower ZR1 version of the Corvette, starting around US$150,000. The hybrid E-Ray, at US$104,900, is pretty potent, too.

But if they’re still too slow, fans of American-engineered muscle can consider the exclusive Texas-built Hennessey Venom F5, a limited-edition carbon-fibre hypercar. Ten years ago, the Hennessey became the world’s fastest production car, defeating the Bugatti Veyron Super Sport, with a top speed of 270.49 miles per hour.

That world title is much sought after, and is currently held by the Sweden-built 1,600-horsepower Koenigsegg Jesko Absolut, with a two-way average top speed of 277.8 mph. But Hennessey is still very much a contender. The company is hoping the 1,817-horsepower F5 (with 1,192 pound-feet of torque) can exceed 300 mph on the track this year.

The Hennessey Venom F5 coupe is sold out, despite a more than $2 million price tag.
Hennessey photo

Hennessey’s previous Venom GT model (introduced in 2010) was based on the Lotus Exige, with a GM LS-based engine, and was built by partner Delta Motorsport. Spokesman Jon Visscher tells Penta , “The new Venom F5, revealed in 2020, is a 100%bespoke creation—unique to Hennessey and featuring a Hennessey-designed 6.6-litre twin-turbo V8 engine boasting 1,817 horsepower, making it the world’s most powerful combustion-engine production car.” Leaps in performance like this tend to be pricey.

This is a very exclusive automobile, priced around US$2.5 million for the coupe, and US$3 million for the F5 Roadster announced in 2023. Only 30 Roadsters will be built, with a removable carbon-fiber roof. The 24 F5 coupes were spoken for in 2021, but if you really want one you could find a used example—or go topless. In a statement to Penta , company founder and CEO John Hennessey said that while the coupe “is now sold out, a handful of build slots remain for our Roadster and [track-focused] Revolution models.”

Only 24 Revolutions will be built in coupe form, priced at US$2.7 million. There’s also a rarefied roadster version of the Revolution, with just 12 to be built.

The Venom F5 Roadster has a removable carbon-fibre roof.
Hennessey photo

The Venom F5 coupe weighs only 3,000 pounds, and it’s not surprising that insane speeds are possible when combined with a hand-built motor (nicknamed “Fury”) created with power uppermost. The V8 in the F5, installed in a rear mid-engine configuration, has a custom engine block and lightweight forged aluminium pistons, billet-steel crankshaft, and forged-steel connecting rods. Twin turbochargers are featured. The F5 can reach 62 mph in less than three seconds, but top speed seems to be its claim to fame.

The driver shifts the rear-wheel-drive car via a seven-speed, single-clutch transmission with paddle shifters. The interior is not as spartan or as tight as in many other supercars, and is able to handle very tall people. The butterfly doors lift up for access.

“With 22 customer Venom F5 hypercars already delivered to customers around the world, and a newly expanded engineering team, we’re focusing the Venom F5 on delivering on its potential,” Hennessey says. “Breaking 300 mph in two directions is the goal we aim to achieve toward the end of this year to claim the ‘world’s fastest production car’ title.”

Hennessey says the car and team are ready. “Now the search is on for a runway or public road with a sufficiently long straight to allow our 1,817-horsepower, twin-turbo V8 monster to accelerate beyond 300 mph and return to zero safely.” The very competitive Hennessey said the track-focused Revolution version of the F5 set a fastest production car lap around Texas’ 3.41-mile Circuit of the Americas track in March, going almost seven seconds faster than a McLaren P1.

The Revolution features a roof-mounted central air scoop (to deliver cool air to the engine bay), a full-width rear carbon wing, larger front splitter and rear diffuser, tweaked suspension, and engine cooling. It’s got the same powertrain as the standard cars, but is enhanced to stay planted at otherworldly speeds.

World Bank Brightens View of Global Growth This Year, Downgrades 2024

Bank warns of risks to poorer nations from rising interest rates