The World Bank slashed its 2023 growth projections for most countries to levels on the verge of recession on Tuesday, as the impact of central bank rate hikes deepens, and Russia’s war in Ukraine continues.
The bank stated that global gross domestic product will grow by 1.7% this year, which would be the slowest rate outside of a recession in 1993 and 2022 and roughly half the rate predicted in June. Previously, the bank had anticipated worldwide growth of 3.0% in 2023.
The report on Tuesday highlighted a number of factors, including the effects of Russia’s invasion of Ukraine, ongoing inflation and higher interest rates as the main causes.
The Washington-based lender predicted that global growth would accelerate to 2.7% in 2024, down from the 2.9% predicted for 2022, and that the average growth for the period of 2020-2024 would be less than 2%, the worst five-year pace since 1960.
The bank said that major slowdowns in advanced economies, such as the dramatic drops to its prediction to 0.5% for both the United States and the euro zone, could portend a new global recession less than three years after the last one.
It also warned that the bleak outlook will hit emerging markets particularly hard because of their high debt levels, dwindling currencies and income growth, and slowing private investment, which is expected to grow at a rate of 3.5% annually over the next two years.
