World Bank Says Global Economy Very Close to Recession

The World Bank has warned in an annual report that the global economy will come “perilously close” to a recession this year. On the back of weak economic growth in the world’s top three economies – the US, Europe and China – the World Bank has cut its forecast for global growth this year to just 1.7%, down from an earlier projection of 3%.

It would mark the third weakest annual expansion in three decades, after the deep recessions brought about by the 2008 global financial crisis as well as the Coronavirus pandemic in 2020.

The US is slated to narrowly avoid a recession, with economic growth projected to be a slim 0.5%. The EU’s economy will likely not grow at all next year after having expanded 3.3% in 2022. China is expected to grow 4.3%, down a full percentage point from previous forecasts and half the rate it achieved in 2021.

The bank expected developing countries to fare slightly better, growing 3.4% this year, the same as in 2022, though still only about half the pace of 2021.

It is expected that higher interest rates in developed nations will divert investment capital from poorer countries, depriving them of an important source of domestic investment. On the whole, the World Bank expects a tough year ahead, exacerbated by Russia’s continued conflict with Ukraine that will add an unnecessary drag on the world economy.