World Bank Sees Rising Risk of Global Recession In 2023  

 

• The world may be edging toward a global recession as central banks across the world simultaneously hike interest rates to combat persistent inflation, the World Bank said on Thursday.
• The world's three largest economies - the United States, China, and the euro area - have been slowing sharply, and even a "moderate hit to the global economy over the next year could tip it into recession," the bank said in a new study.
• The global economy was now in its steepest slowdown following a post-recession recovery since 1970, and consumer confidence had already dropped more sharply than in the run-up to previous global recessions. World Bank President David Malpass indicated that there are concerns that these trends could persist, with devastating consequences for emerging market and developing economies.
• “Synchronized interest rate hikes underway globally and related policy actions were likely to continue well into next year, but might not be sufficient to bring inflation back down to levels seen before the COVID-19 pandemic,” the bank said.
• Unless supply disruptions and labour-market pressures subsided, the global core inflation rate, excluding energy, could stay at about 5% in 2023, nearly double the five-year average before the pandemic.
• The study suggested that central banks could combat inflation without tipping off a global recession by communicating their policy decisions clearly, while policymakers should put in place credible medium-term fiscal plans and continue to provide targeted relief to vulnerable households.

(Source: Reuters)