World Bank warns of global recession in 2023

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The world may be edging toward a global recession as central banks simultaneously raise interest rates to combat persistent inflation, the World Bank warned in a recent study.

The three largest economies, – the US, China and the eurozone – have been slowing sharply, and even a “moderate hit to the global economy over the next year could tip it into recession”, the bank added.

It said the global economy was now in its steepest slowdown after a post-recession recovery since 1970, and consumer confidence had already dropped more sharply than in the run-up to previous global recessions.

“Global growth is slowing sharply, with further slowing likely as more countries fall into recession,” the World Bank president, David Malpass, said.

Synchronised interest rate increases under way globally and related policy actions were likely to continue well into next year but may not be sufficient to bring inflation back down to levels seen before the COVID-19 pandemic.

Unless supply disruptions and labour-market pressures subsided, the global core inflation rate, excluding energy, could stay at about 5% in 2023, almost double the five-year average before the pandemic, the World Bank added.