World Bank Predicts 2023 Global Recession
January 11, 2023 8:11 AM
The World Bank predicted a 2023 worldwide recession, according to Reuters. 2022 saw near-constant rate hikes and recession fears. That decision may affect this year.
The World Bank lowered its 2023 growth prediction Thursday, putting many countries on the edge of recession. Russia's war on Ukraine and the central bank's raising interest rates make 2023's economic outlook bleak.
The 2022 economy was intriguing. Interest rate hikes continued despite the US central bank's claims that employment was stable enough. Thus, other countries raised interest rates to counteract inflation.
The World Bank has predicted a global recession in 2023, so that decision might have serious effects. Reuters reported that the World Bank expects 1.7% global GDP growth this year. That number was the slowest outside of the 2009 and 2020 recessions in 30 years. The bank's 2022 Global Economic Prospects predicted 3.0% growth.
According to Reuters, the bank has blamed "slowdowns in advanced economies" and dropped its U.S. and Eurozone forecasts to 0.5%, which might signal a global recession. Worse, it would occur three years after its previous recession in 2020.
The bank explained the economic factors that led to their dismal projections. “Given fragile economic conditions, any additional unfavorable development—such as higher-than-expected inflation, abrupt rises in interest rates to curb it, a revival of the COVID-19 epidemic or growing geopolitical tensions—could push the global economy into a recession,” the bank said.
The World Bank concluded that the forecast will hit emerging economies hardest. Already facing “heavy debt burdens, weak currencies, and income growth, and decreasing business investment that is now predicted at a 3.5% annual growth rate over the next two years,” Reuters reported. The World Bank is also expected to propose a "evolution road plan," according to the report.