World Bank Makes Downward Revision to Economic Outlook
New analysis by the World Bank, a Global recession in 2023 and financial crises in emerging market and developing countries may cause permanent damage to the world economy. The revised growth prediction this year went from 3% to 1.7%, which would be the 3rd worst year for growth in 30 years.
The United States, Eurozone, and China are all expected to see immense drops, predicting a “dramatic, long-lasting slowdown.” Historically such slowdowns have preceded global recessions. In a statement to reporters World Bank President David Malpass said, “Russia’s invasion of Ukraine has brought huge additional expenses.”
“Access to energy, fertilizer, food, and capital, could remain severely constrained for an extended period and predicts that the rate of price increases will decrease from 7.6% in 2022 to 5.2% this year but warns that certain price surges are conceivable.”
Much of this assessment comes from the recent moves of many Central Banks raising rates to combat persistent inflation. Coupled with a strong US Dollar causing a squeeze to the budgets of emerging and impoverished countries. It may also be important to note that the expected slowdown comes from the perspective of the impact to many of the world’s poorest countries and emerging economies.