The World Bank warned that the global economy is “perilously close” to a recession this year.
On Tuesday, the World Bank, which lends money to poorer countries for development projects, released an official statement, warning the globe that the world economy is close to facing recession.
The Bank claimed that the potential recession will be led by the weaker growth in world’s top countries with top high economies, including China, Europe and the United States.
According to the World Bank’s annual report, it had “slashed its forecast for global growth this year by nearly half, to just 1.7%, from its previous projection of 3%. If that forecast proves accurate, it would be the third-weakest annual expansion in three decades, behind only the deep recessions that resulted from the 2008 global financial crisis and the coronavirus pandemic in 2020.” Associated Press wrote in its exclusive report.
“Though the United States might avoid a recession this year — the World Bank predicts the U.S. economy will eke out growth of 0.5% — global weakness will likely pose another headwind for America’s businesses and consumers, on top of high prices and more expensive borrowing rates. The United States also remains vulnerable to further supply chain disruptions if COVID-19 keeps surging or Russia’s war in Ukraine worsens.” AP News added.
The World Bank also revealed that the increasing interest rates in developed economies like Europe and the US will attract poorer countries to invest but slow the growth of developed countries especially amid Russia’s invasion of Ukraine where world food prices are kept high.
In an official statement released by World Bank President David Malpass on a call with reporters, he claimed that “Russia’s invasion of Ukraine has added major new costs. The outlook is particularly devastating for many of the poorest economies where poverty reduction is already ground to a halt and access to electricity, fertilizer, food and capital is likely to remain limited for a prolonged period.”
Malpass also added that the “weakness in growth and business investment will compound the already devastating reversals in education, health, poverty and infrastructure and the increasing demands from climate change.”
“Addressing the scale of these challenges will require significantly more resources for development and global public goods,” he added.
