World Bank warns of the potential for a global recession in 2023

With no end in sight for the Russia-Ukraine war, rising inflation and central banks across countries increasing interest rates to contain it, and the world economies reeling from the impact of the COVID pandemic, the World Bank has expressed growing concerns over the ever-increasing possibility of a global recession. The international entity has predicted a global GDP rate of 1.7 percent for 2023, in contrast to its earlier optimistic prediction in its Global Economic Prospects report released in June 2022, which forecast a global growth rate of 3 percent for the same year.

Higher inflation, dwindling investment, and the impact of the ongoing war are mentioned as reasons for slow economic growth by the World Bank in its latest report. Any further disruptions, like an escalation in geopolitical tensions, or a revival of COVID, could force the global economy into recession. A detailed analysis of medium-term investment growth in emerging economies and developing markets is also elucidated in the latest report.

The international lender remarked, “This would be the first time in over 80 years that the world faced two global recessions in the same decade.” An average per capita income appreciation of 2.8 percent, a 100-point decrease from the 2010–2019 average, has been projected for developing and emerging economies. It has been predicted that the global economy should pick up by 2024, increasing to a growth rate of 2.7 percent – a 1 percent increase from the previous fiscal – rendering the average growth in 2020–24 under 2 percent, the slowest since 1960.

The World Bank President, David Malpass, remarked, “A slow growth rate and decreasing business investment will exacerbate the existing catastrophic reversals in healthcare, education, infrastructure, poverty alleviation, and the pressing need for immediate climate change actions.”