The World Bank is concerned that “further adverse shocks” could push the global economy into recession in 2023, with small states especially vulnerable, reports Bloomberg. The warning is contained in an abstract for the bi-annual “Global Economic Prospects” report due for release on Tuesday and visible on the group’s Open Knowledge Repository website.
Even without another crisis, global growth this year “is expected to decelerate sharply, reflecting synchronous policy tightening aimed at containing very high inflation, worsening financial conditions, and continued disruptions from Russia’s invasion of Ukraine,” the World Bank said.
“Urgent global and national efforts” are needed to mitigate the risks posed by the slowdown in economic activity and the debt burden facing emerging markets and developing economies (EMDEs), where investment growth is expected to remain below the average of the last two decades, warned the Washington-based financial institution.
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“It is essential that authorities in emerging and developing countries ensure that any fiscal support is focused on vulnerable groups, that inflationary expectations remain well anchored, and that the financial system continues to be resilient,” the World Bank says.
Central bankers from all around the world have made such demands as they aggressively boost interest rates to reduce pricing pressures while governments help businesses and people by keeping energy costs in check.
The managing director of the International Monetary Fund, Kristalina Georgieva, warned that 2023 would be “a terrible year, harsher than the year we leave behind” for the world. Because the US, the EU, and China are all slowing down at the same time, one-third of the world economy will be in recession, she predicted in an interview with CBS’s “Face the Nation” that aired on January 1.