The World Bank slashed its growth forecasts for most countries, warning that new adverse shocks could tip the global economy into a recession.
According to the lender, global GDP is expected to rise 1.7% this year, roughly half the rate predicted in June.
It also cut growth estimates for 2024, citing persistent inflation and higher interest rates as key reasons. It also noted the impact of Russia’s invasion of Ukraine and a decline in investment.
“The crisis facing development is intensifying,” and the setbacks to global prosperity will likely persist, World Bank President David Malpass wrote in a foreword to the bank’s semi-annual Global Economic Prospects report.
“Global growth has slowed to the extent that the global economy is perilously close to falling into recession.”
East Asia and Pacific: Growth is expected to increase to 4.3% in 2023 and to 4.9% in 2024.
Europe and Central Asia: Growth is expected to slow to 0.1% in 2023 before increasing to 2.8% in 2024.
Latin America and the Caribbean: Growth is projected to slow to 1.3% in 2023 before recovering to 2.4% in 2024.
Middle East and North Africa: Growth is expected to slow to 3.5% in 2023 and 2.7% in 2024.
South Asia: Growth is projected to slow to 5.5% in 2023 before picking up to 5.8% in 2024.
Sub-Saharan Africa: Growth is expected to be at 3.6% in 2023 and rise to 3.9% in 2024.
“Even though the world is now in a very tight spot, there should be no room for defeatism,” Malpass said.
“There are significant reforms that could be undertaken now to strengthen the rule of law, improve the outlook and build stronger economies with more robust private sectors and better opportunities for people.”