World economy dangerously close to recession, says World Bank

Washington, October 14: The global economy is “dangerously close” to a recession as inflation remains high, interest rates rise and the growing debt burden hits the developing world, World Bank President David bad pass.

“We have lowered our growth forecast for 2023 from 3% to 1.9% for global growth, which is dangerously close to a global recession,” Malpass said during a press conference during the annual meetings of the IMF and World Bank on Thursday.

“All the problems that people have taken notice of, the problem of inflation, rising interest rates and cutting off capital flows to the developing world have hit the poor hard,” he said. , highlighting the accumulation of debt in developing countries.

“It’s a world where recessions could happen under certain circumstances,” Malpass said.

In a study released in mid-September, the World Bank warned that as central banks around the world simultaneously raise interest rates in response to inflation, the world could be heading for a global recession in 2023. , with a growth forecast of only 0.5% , reports the Xinhua news agency.

The head of the World Bank noted at the press conference that global population growth is estimated at 1.1% per year.

“So if you’re slowing down a lot in terms of global growth, that means people are going backwards,” Malpass said in response to a question from Xinhua.

Citing a recent World Bank report, Malpass said the Covid-19 pandemic has caused the biggest setback to global poverty reduction efforts since 1990, pushing an estimated 70 million people into extreme poverty in 2020. and the war in Ukraine threatens to make matters worse.

According to the Poverty and Shared Prosperity report, global median income fell 4% in 2020, the first drop since its median income measures began in 1990.

“So if we have a global recession now, that would also reduce the median income, which means people in the lower half of the income scale are going down,” Malpass said.

The World Bank chief also noted that he was concerned about the concentration of capital around the world in the high end of advanced economies.

“So that’s, I think, one of the issues the world has to deal with to allow capital to flow to new businesses and to developing countries, which would require a change of direction in fiscal and monetary policies. in advanced economies,” says Malpass.

The world is facing a very difficult environment from advanced economies, and this has serious implications, dangers for developing countries, he said.

“My deep concern is that these conditions and trends could persist into 2023 and 2024.”