January 10, (THEWILL) – The World Bank has cut the global growth forecast for 2023 to 1.7 percent from 2.9 percent while warning that the world is at risk of a recession.
The Washington-based institution has cited a combination of factors like high inflation, rising interest rates, lower investment and Russia’s invasion of Ukraine as threats to growth, apart from China’s Covid-related disruptions and stress in its real-estate sector, for lowering its estimate.
“Global growth has slowed to the extent that the global economy is perilously close to falling into recession”, the World Bank said in its latest report released on Tuesday.
It further warned that any fresh setback, such as escalating global tensions, high inflation, rising interest rate, could further derail the global economy and could result in a second recession in three years.
The World Bank forecasts US GDP to grow 0.5 percent compared to 2022 and expects new growth for the European bloc.
It predicts China’s GDP will grow 4.3 percent in 2023, an uptick from 2.7 percent last year.
The bank said that the Russian economy is expected to contract 3.3 percent from 3.5 percent last year, as sanctions will take a toll on spending and investment.
The bank called for a “major increase” in investment for developing nations, including new financing from the international community and from the repurposing of existing spending, such as inefficient agricultural and fuel subsidies.
“Even though the world is now in a very tight spot, there should be no room for defeatism.
“There are significant reforms that could be undertaken now to strengthen the rule of law, improve the outlook and build stronger economies with more robust private sectors and better opportunities for people”, David Malpass, president of the World Bank said.
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