World Bank Warns That Global Economy Is in Danger of Recession

The global economy, led by the slower economic growth in the USA, Europe and China, could get dangerously close to a recession, the World Bank warns in its annual report, in which it has halved its global growth prognosis to 1.7% compared to the previous one of 3%. If that prognosis turns out to be true, it would be the third weakest annual growth in three decades, after the deep recessions following the global financial crisis of 2008 and the 2020 pandemic.

Although the USA could avoid a recession this year, the World Bank projects that the American economy will realize a growth of 0.5% and that the weak growth on the global level will most probably be another obstacle to American companies and consumers, in addition to the high prices and higher interest rates.

The USA could also be affected by the supply chain disturbance if the number of new coronavirus infections grows or the war in Ukraine worsens.

Europe, which has for a long time been an exporter to China, will probably feel the weakening of the Chinese economy.

The announcement by the World Bank says that the growing interest rates in developed economies such as the USA and European states will attract investment capital from poorer countries which could have an impact on local investments. At the same time, those high interest rates will slow down the growth in more developed states during the period of high prices, due to the war in Ukraine.

The impact of the global drop would be especially felt in poorer countries in areas such as the Saharan Africa, where the World Bank project the per-capita income to grow only 1.2% in 2023 and 2024. That would be such a small growth that the poverty rates could increase.

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