The World Bank has expressed concern that the world economy might enter a recession as the rate of growth decelerates and the overall situation remains delicate. According to the most recent Global Economic Prospects report, expansion is only anticipated to be 1.7% by 2023, which is significantly lower than the 3% previously projected. For 2024, the projected rate of growth stands at 2.7%.
The IMF report predicted that a vast majority of advanced economies and nearly seven out of ten emerging and developing economies are expected to experience a sharp decrease in growth by 2023.
Inflation that continues to rise, high interest rates, a fall in investment and the tense geopolitical situation in Ukraine are all factors that have contributed to a sharp decline. The World Bank has recently stated that this will be the first time in more than 8 decades that two global recessions will have taken place within the same decade.
It has been forecast that growth in developed economies will decline to 0.5% in 2023, which is a decrease from the prior forecast of 2.5%. The United States is also predicted to expand by 0.5% this year and the euro area is estimated to expand by 0%. China, on the other hand, is projected to grow by 4.3%.
David Malpass, President of the World Bank Group, has announced that the crisis is worsening and that nations in the developing and emerging economies are likely to experience a period of sluggish growth due to debt overloads and reduced investment. Malpass further noted that the advanced economies are taking in much of the global capital as government debt levels and interest rates rise.
The outlook from the World Bank contains potential hazards surrounding core inflation, as extended periods of inflation could induce central banks to employ tightening measures, following a year of synchronised and unprecedented price increases.
