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Growth forecasts conceded: World Bank: economy close to recession

Growth forecasts cashed in
World Bank: Economy close to recession

According to estimates by the World Bank, economic growth will slow down significantly around the world. Any unexpected shock could lead to a recession. The poorer countries in particular would face hard times. The economists fear that it could take time for an improvement.

The World Bank in Washington expects a significant and long-lasting global economic downturn this year due to high inflation rates, rising interest rates and as a result of the Russian attack on Ukraine. “Global growth has slowed to the point that the global economy is dangerously close to recession,” she said in her latest report. The experts lowered their forecast from 3.0 to just 1.7 percent. Apart from the crisis years of 2009 and 2020, that would be the lowest value in almost three decades. The financial organization’s previous forecast dates back to June. According to the forecast, there will be an economic recovery next year. However, it will be comparatively modest at 2.7 percent.

“I am deeply concerned that the slowdown may continue,” said World Bank chief David Malpass. In practically all regions of the world, per capita income will grow more slowly than in the period before the corona pandemic, according to the report “Global Economic Prospects”. Development will hit developing countries particularly hard, according to Malpass. “There is a devastating disconnect between the regions that need large amounts of new investment to support growing populations and actual investment flows,” he warned.

The World Bank expects a noticeable cooling off for the industrial nations. The experts spoke of a fragile situation. Any unexpected shock could lead to a global recession. Possible examples of this were new geopolitical tensions or a flare-up of the corona pandemic.

For China – the second largest economy – the World Bank predicts growth of 4.3 percent this year. That is 0.9 points less than expected in June. Last year, the growth rate was 2.7 percent, the second lowest since the mid-1970s. In addition to the strict corona policy, this was due to upheavals on the country’s real estate markets and weak consumption. The World Bank expects low growth of 0.5 percent for the USA and zero growth for the euro zone due to the energy crisis.

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