Please ensure Javascript is enabled for purposes of website accessibility
World Bank: Recession a Looming Threat for Global Economy
gvw_ap_news
By Associated Press
Published 2 years ago on
January 10, 2023

Share

Getting your Trinity Audio player ready...

WASHINGTON — The global economy will come “perilously close” to a recession this year, led by weaker growth in all the world’s top economies — the United States, Europe and China — the World Bank warned on Tuesday.

In an annual report, the World Bank, which lends money to poorer countries for development projects, said it had slashed its forecast for global growth this year by nearly half, to just 1.7%, from its previous projection of 3%. If that forecast proves accurate, it would be the third-weakest annual expansion in three decades, behind only the deep recessions that resulted from the 2008 global financial crisis and the coronavirus pandemic in 2020.

Though the United States might avoid a recession this year — the World Bank predicts the U.S. economy will eke out growth of 0.5% — global weakness will likely pose another headwind for America’s businesses and consumers, on top of high prices and more expensive borrowing rates. The United States also remains vulnerable to further supply chain disruptions if COVID-19 keeps surging or Russia’s war in Ukraine worsens.

And Europe, long a major exporter to China, will likely suffer from a weaker Chinese economy.

The World Bank report also noted that rising interest rates in developed economies like the United States and Europe will attract investment capital from poorer countries, thereby depriving them of crucial domestic investment. At the same time, the report said, those high interest rates will slow growth in developed countries at a time when Russia’s invasion of Ukraine has kept world food prices high.

“Russia’s invasion of Ukraine has added major new costs,” World Bank President David Malpass said on a call with reporters. “The outlook is particularly devastating for many of the poorest economies where poverty reduction is already ground to a halt and access to electricity, fertilizer, food and capital is likely to remain limited for a prolonged period.”

IMF Head: ‘For Most of World Economy, This Is Going to Be a Tough Year’

The impact of a global downturn would fall particularly hard on poorer countries in such areas as Saharan Africa, which is home to 60% of the world’s poor. The World Bank predicts per capita income will grow just 1.2% in 2023 and 2024, which is such a tepid pace that poverty rates could rise.

“Weakness in growth and business investment will compound the already devastating reversals in education, health, poverty and infrastructure and the increasing demands from climate change,” Malpass said. “Addressing the scale of these challenges will require significantly more resources for development and global public goods.”

Along with seeking new financing so it can lend more to poorer countries, Malpass said, the World Bank is, among other things, seeking to improve its lending terms that would increase debt transparency, “especially for the rising share of poor countries that are at high risk of debt distress.”

The report follows a similarly gloomy forecast a week earlier from Kristina Georgieva, the head of the International Monetary Fund, the global lending agency. Georgieva estimated on CBS’ “Face the Nation” that one-third of the world will fall into recession this year.

“For most of the world economy, this is going to be a tough year, tougher than the year we leave behind,” Georgieva said. “Why? Because the three big economies — U.S., EU, China — are all slowing down simultaneously.”

The World Bank projects that the European Union’s economy won’t grow at all next year after having expanded 3.3% in 2022. It foresees China growing 4.3%, nearly a percentage point lower than it had previously forecast and about half the pace that Beijing posted in 2021.

The bank expects developing countries to fare better, growing 3.4% this year, the same as in 2022, though still only about half the pace of 2021. It forecasts Brazil’s growth slowing to 0.8% in 2023, down from 3% last year. In Pakistan, it expects the economy to expand just 2% this year, one-third of last year’s pace.

Other economists have also issued bleak outlooks, though most of them not quite as dire. Economists at JPMorgan are predicting slow growth this year for advanced economies and the world as a whole, but they don’t expect a global recession. Last month, the bank predicted that slowing inflation will bolster consumers’ ability to spend and power growth in the United States and elsewhere.

“The global expansion will turn into 2023 bent but not broken,” the JPMorgan report said.

DON'T MISS

What Are Fresno Real Estate Experts Predicting for 2025 and Beyond?

DON'T MISS

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

DON'T MISS

Chargers in Need of Help at Wide Receiver and Tight End in the NFL Draft

DON'T MISS

Magic Happens When Kids and Adults Learn to Swim. Tragedy Can Strike if They Don’t.

DON'T MISS

Big Fresno Fair Board Will Be Led by an American Sikh for 1st Time

DON'T MISS

AI ‘Friend’ for Public School Students Falls Flat

DON'T MISS

Is a ‘Friend-Apist’ What We Really Want From Therapy?

DON'T MISS

Yemen’s Houthi Rebels Report US Strikes in the Capital and a Coastal City

DON'T MISS

Progressive Icon and Ex-US Rep. Barbara Lee Wins Race for Mayor of Oakland

DON'T MISS

Humanoid Robots Run a Chinese Half-Marathon Alongside Human Competitors

DON'T MISS

Bakersfield Push to Restore Kern River Seeks to Revitalize City

DON'T MISS

Anti-Trump Protesters Turn Out to Rallies Across Country

UP NEXT

Humanoid Robots Run a Chinese Half-Marathon Alongside Human Competitors

UP NEXT

US Small Manufacturers Hope to Benefit From Tariffs, but Some Worry About Uncertainty

UP NEXT

US and Iran Advance Nuclear Talks to Expert Level After Rome Meeting

UP NEXT

Russian Missile Attack Kills One, Wounds 112 in Ukraine’s Kharkiv, Officials Say

UP NEXT

Iran Says Nuclear Deal Is Possible if Washington Is Realistic

UP NEXT

The US Has a Single Rare Earths Mine. Chinese Export Limits Are Energizing a Push for More

UP NEXT

Israeli Strikes Kill at Least 25 in Gaza and Huckabee Makes First Appearance as US Ambassador

UP NEXT

Iran Wants Guarantees Trump Will Not Quit a New Nuclear Pact, Iranian Official Says

UP NEXT

Deadliest US Strike in Yemen Kills 74, Houthis Say

UP NEXT

Hamas Ready to Release All Remaining Hostages for End to Gaza War, Hamas’ Gaza Chief Says

AI ‘Friend’ for Public School Students Falls Flat

18 hours ago

Is a ‘Friend-Apist’ What We Really Want From Therapy?

18 hours ago

Yemen’s Houthi Rebels Report US Strikes in the Capital and a Coastal City

1 day ago

Progressive Icon and Ex-US Rep. Barbara Lee Wins Race for Mayor of Oakland

1 day ago

Humanoid Robots Run a Chinese Half-Marathon Alongside Human Competitors

1 day ago

Bakersfield Push to Restore Kern River Seeks to Revitalize City

1 day ago

Anti-Trump Protesters Turn Out to Rallies Across Country

1 day ago

Universal Studios Fan Fest 2025 to Feature Immersive D&D Attraction and More

2 days ago

Thousands Gather in London for Trans Rights Following UK Ruling Over Definition of Woman

2 days ago

250 Years After America Went to War for Independence, a Divided Nation Battles Over Its Legacy

2 days ago

Chargers in Need of Help at Wide Receiver and Tight End in the NFL Draft

EL SEGUNDO — In their first season together, Los Angeles Chargers general manager Joe Hortiz and coach Jim Harbaugh rebuilt the team enough ...

17 hours ago

17 hours ago

Chargers in Need of Help at Wide Receiver and Tight End in the NFL Draft

17 hours ago

Magic Happens When Kids and Adults Learn to Swim. Tragedy Can Strike if They Don’t.

17 hours ago

Big Fresno Fair Board Will Be Led by an American Sikh for 1st Time

18 hours ago

AI ‘Friend’ for Public School Students Falls Flat

18 hours ago

Is a ‘Friend-Apist’ What We Really Want From Therapy?

1 day ago

Yemen’s Houthi Rebels Report US Strikes in the Capital and a Coastal City

1 day ago

Progressive Icon and Ex-US Rep. Barbara Lee Wins Race for Mayor of Oakland

1 day ago

Humanoid Robots Run a Chinese Half-Marathon Alongside Human Competitors

Help continue the work that gets you the news that matters most.

Search

Send this to a friend