World Bank Slashes Economic Outlook, Warns of Global Recession
January 17, 2023
The World Bank has substantially cut its global growth forecasts for 2023, citing broadly worsening economic conditions since its previous projections made in mid-2022.
The group’s latest Global Economics Prospect report saw large downgrades for most of the world’s advanced economies and cut its global growth forecast nearly in half. Current projections show the world economy growing just 1.7% in 2023, down from a forecast of 3% made last year.
The revision was led by a significant downgrade to its prospects for the U.S. economy, which the group now expects to grow just 0.5%, down from an earlier projection of 2.4%. Europe and Central Asia saw a similar downgrade from 1.5% to just 0.1%.
The World Bank warned that “global growth has slowed to the extent that the global economy is perilously close to falling into recession,” and attributed the slowdown to the “unexpectedly rapid and synchronous” monetary policy tightening being enacted by central banks throughout the world.
If the current projections prove to be accurate, it would be the third weakest pace of economic growth in nearly three decades, overshadowed only by the slowdowns seen during the pandemic and great financial crisis.
The organization also lowered its 2024 forecasts to 2.7% from an earlier prediction of 3% growth.