The World Bank has forecast a global recession. David Malpass, the Bank’s president, says that the global economy is “perilously close to falling into recession”.
The Bank expects the world economy to grow by just 1.7% this year – a sharp decrease from the 3% it predicted in June.
The 1.7% growth figure would be the lowest since 1991, with the exceptions of the recessions of 2009 and 2020, which were caused by the global financial crisis and the COVID-19 pandemic.
The report blames a number of factors for the gloomy situation including Russia’s invasion of Ukraine and the impact of the pandemic.
Equally, the effects of higher interest rates are picked out as the key challenge for policy makers to overcome.
Malpass said the downturn would be “broad-based” and growth in people’s earnings in almost every part of the world was likely to “be slower than it was during the decade before Covid-19”.
The World Bank said the US, the Eurozone and China – the three most influential parts of the world for economic growth – were “all undergoing a period of pronounced weakness”, a downturn that was worsening the problems faced by poorer countries.
Over the past two decades, slowdowns of this scale have foreshadowed a global recession,” the bank warned, adding that it anticipated “a sharp, long-lasting slowdown”.
If a global recession were to occur, it would be the first time since the 1930s that there have been two global recessions within the same decade.