‘Perilously close to falling into recession’: World Bank cuts 2023 global growth to 1.7%
The bank warned that any further setback could result in second successive recession in three years
The World Bank has cut the global growth forecast for 2023 to 1.7 per cent from 2.9 per cent, while issuing a warning that the world is at risk of a recession.
It has cut growth estimates of almost every developed country and nearly 70 per cent of emerging and developing countries.
The Washington-based institution has cited a combination of factors like high inflation, rising interest rates, lower investment and Russia’s invasion of Ukraineas threats to growth, apart from China’s Covid-related disruptions and stress in its real-estate sector, for lowering its estimate.
“Global growth has slowed to the extent that the global economy is perilously close to falling into recession,” the World Bank said in its latest report.
It further warned that any fresh setback, such as escalating global tensions, high inflation, rising interest rate, could further derail the global economy and could result in a second recession in three years.
The World Bank forecasts US GDP to grow 0.5 per cent compared to last year, and expects now growth for the European bloc.
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It predicts China’s GDP to grow 4.3 per cent in 2023, an uptick from 2.7 per cent growth last year.
The Russian economy is expected to contract 3.3 per cent in 2023 from 3.5 per cent last year, as sanctions will take a toll on spending and investment, the bank said.
The bank called for a “major increase” in investment for developing nations, including new financing from the international community and from the repurposing of existing spending, such as inefficient agricultural and fuel subsidies.
“Even though the world is now in a very tight spot, there should be no room for defeatism,” David Malpass, president of the World Bank, said.
“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.”
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