Many Countries On Brink Of Recession In 2023, Warns World Bank The development lender reportedly said that it now expected global GDP growth of 1.7% in 2023, the slowest pace outside the 2009 and 2020 recessions in nearly three decades
By Teena Jose
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The World Bank slashed its 2023 growth forecasts on Tuesday to levels teetering on the brink of recession for many countries as the impact of central bank rate hikes intensifies, Russia's war in Ukraine continues, and the world's major economic engines sputter, according to a Reuters report.
World Bank president David Malpass, in a foreword to the bank's semi-annual Global Economic Prospects report, wrote that the crisis facing development is intensifying and the setbacks to global prosperity will likely to persist.
The development lender reportedly said that it now expected global GDP growth of 1.7% in 2023, the slowest pace outside the 2009 and 2020 recessions in nearly three decades. In its previous Global Economic Prospects report, in June 2022, the bank had forecast 2023 global growth at 3.0%, stated the report.
"The combination of slow growth, tightening financial conditions, and heavy indebtedness is likely to weaken investment and trigger corporate defaults. Urgent global action is needed to mitigate the risks of global recession and debt distress," said the World Bank in a statement, as per the news report.
The bank, which also cut its growth estimates for 2024, said persistent inflation and higher interest rates are among the key reasons, citing the impact of Russia's invasion of Ukraine, and a decline in investment.
"Weakness in growth and business investment will compound the already devastating reversals in education, health, poverty and infrastructure and the increasing demands from climate change," Malpass said in a statement, as per the report.
The World Bank reportedly noted that some inflationary pressures started to abate as 2022 drew to a close, with lower energy and commodity prices, but warned that risks of new supply disruptions were high, and elevated core inflation may persist. This could cause central banks to respond by raising policy rates by more than currently expected, worsening the global slowdown.
Sharing his optimistic outlook on the current condition, Malpass further added that, "Even though the world is now in a very tight spot, there should be no room for defeatism. There are significant reforms that could be undertaken now to strengthen the rule of law, improve the outlook and build stronger economies with more robust private sectors and better opportunities for people."
