World Bank warns of potential global recession this year

The World Bank warned on Tuesday that any adverse shocks to the global economy in 2023 could trigger a recession.

Amid high inflation and interest rates, reduced investment and Russia’s ongoing war in Ukraine, the global economy is in a precarious state coming into the new year, according to the World Bank’s biannual Global Economic Prospects report.

“Global growth has slowed to the extent that the global economy is perilously close to falling into recession … only three years after emerging from the pandemic-induced recession of 2020,” the report said.

The World Bank downgraded its growth forecast for the year, projecting that the global economy will grow by just 1.7 percent in 2023. In its June report, the international financial institution had predicted a 3 percent growth rate.

In the last 30 years, only the financial crisis in 2009 and the COVID-19 pandemic in 2020 have produced a weaker growth rate than the 2023 forecast, according to the World Bank.

The United States, Europe and China have all seen their individual growth forecasts downgraded as well. The World Bank projected that the U.S. will face a 0.5 percent growth rate in 2023, while growth in Europe will fall to zero percent. China’s growth rate was lowered 0.9 percentage points to 4.3 percent. 

“Over the past two decades, slowdowns of this scale have foreshadowed a global recession,” the World Bank added in a press release on Tuesday.