WASHINGTON(AP) Jan,10 – The global economy will be “dangerously close” to a recession this year, led by slowing growth in all major economies in the US, Europe and China, the World Bank warned Tuesday.
In its annual report, the World Bank, which finances development projects in poor countries, said it cut its forecast for global economic growth this year by almost half from his previous forecast of 3% to just 1.7%. Stated. If the forecast is correct, it would be the third weakest annual expansion in 30 years, behind only the 2008 global financial crisis and the 2020 pandemic-induced deep recession.
The World Bank expects the US economy to grow by 0.5%, which could avoid a recession this year, but the global weakness is a combination of higher prices and higher lending rates. It could create new headwinds for US businesses and consumers. The US also remains vulnerable to further supply chain disruptions if COVID continues to increase or the war in Ukraine worsens. The World Bank report also found that rising interest rates in developed countries such as the United States and Europe are attracting investment money from poorer countries and depriving them of vital domestic investment. At the same time, the report said these high interest rates are slowing growth in developed economies and Russia’s invasion of Ukraine is keeping food prices high around the world.
“Weak growth and business investment will exacerbate the already devastating blows to education, health, poverty and infrastructure, as well as the growing demands of climate change,” said World Bank President David Malpass.
The report follows a similarly grim forecast made by Christina Georgieva, head of the International Monetary Fund, the global credit institution, a week before her. Georgieva, on CBS’s Face the Nation, estimates that her third of the world will be in recession this year. “This year will be a tough year for most of the global economy, even tougher than the year we left,” Georgieva said. “Why? Because her three largest economies – the US, the EU and China – are slowing down at the same time.”
After his 3.3% growth in 2022, the World Bank predicts his EU economy will not grow at all next year. China’s growth rate is 4.3%, almost a percentage point lower than previously forecast and about half the rate announced by Beijing 2021.
The bank expects the developing world to grow 3.4% this year, the same as in 2022, but still about half the speed of 2021. Brazil’s growth is forecast to slow to 0.8% in 2023 from 3% last year. Pakistan’s economy is expected to grow at just 2% this year, a third of last year’s.
Other economists are also pessimistic, but most economists are less pessimistic. JP Morgan economists expect slowing growth in the developed world and the world as a whole this year, but do not expect a global recession. The bank said last month that lower inflation would boost consumer spending power, spurring growth in the U.S. and elsewhere. A report from JP Morgan said, “The global expansion will bend in 2023, but not break.”
