HomeBlogIn 2023, the world is predicted to face global recession?
In 2023, the world is predicted to face global recession?
WB President warns of global recession due to inflation, rising interest rates, and increasing debt, impacting developing countries severely.
If central banks globally raise interest rates simultaneously, with forecasted growth reaching only 0.5%, it could lead to a global recession in 2023 as highlighted by the World Bank (WB).
WB President David Malpass cautioned at a press briefing during the annual meetings of the IMF and WB in Washington on October 13 that the global economy is dangerously close to recession due to inflation, rising interest rates, and increasing debt burden affecting developing countries.
The WB has revised its global economic growth forecast for 2023 from 3% to 1.9%, dangerously close to global economic recession. Malpass emphasized that inflation, rising interest rates, and reduced capital flows to developing countries are severely impacting the poor. He stated that a global economic recession could occur under certain circumstances. In a study released in mid-September 2022, the WB warned that if central banks worldwide collectively increase interest rates to curb inflation, the world could head towards a global recession in 2023, with projected growth reaching only 0.5%.
Malpass highlighted that the world's population is estimated to grow by about 1.1% per year. Therefore, if economic growth lags significantly behind population growth, it means an increase in poverty. According to a recent WB report, Malpass noted that the COVID-19 pandemic has reversed global achievements in poverty reduction since 1990, pushing approximately 70 million people into extreme poverty by 2020 and the conflict in Ukraine poses a risk of exacerbating this situation further. According to the WB's latest update on poverty and shared prosperity, global average income decreased by 4% in 2020, marking the first decline since the WB began assessing average income levels in 1990.
Malpass emphasized that in the event of a global economic recession, average income will further decrease. He stated that the world is facing a challenging environment from developed economies, posing a threat to developing countries. "My biggest concern is that this situation and trend could extend into 2023 and 2024."
