Finance
According to World Bank President David Malpass, the global economy is “dangerously close” to a recession as inflation remains high, interest rates rise, and the developing world’s debt burden grows.
“We’ve reduced our global growth forecast for 2023 from 3% to 1.9%, which is dangerously close to a global recession,” Malpass said at a press conference on Thursday during the IMF and World Bank annual meetings.
“All of the problems that people have taken note of, the inflation problem, the interest rate rises, and the cutoff of capital flow to developing world hit the poor hard,” he said, highlighting the buildup of debt for developing countries.
“That’s a world recessions could happen under certain circumstances,” Malpass said.
According to Xinhua news agency, the World Bank warned in a study published in mid-September that as central banks around the world simultaneously raise interest rates in response to inflation, the world may be edging toward a global recession in 2023, with a growth forecast of only 0.5%.
During the press conference, the World Bank chief stated that global population growth is estimated to be 1.1% per year.
“So if you get much slower in terms of world growth, that means people are going backward,” Malpass said in response to a question from Xinhua.
According to Malpass, citing a recent World Bank report, the Covid-19 pandemic has dealt the greatest setback to global poverty-reduction efforts since 1990, pushing approximately 70 million people into extreme poverty by 2020, and the war in Ukraine threatens to exacerbate the situation.
According to the Poverty and Shared Prosperity Report, global median income will fall by 4% in 2020, the first drop since the report began measuring median income in 1990.
“So if we have a world recession now, that would also depress median income, meaning that the people in the lower half of the income scale are going down,” Malpass said.
The World Bank president also expressed concern about the concentration of capital in the world’s top advanced economies.
“So that’s, I think, one of the issues that the world has to deal with to allow capital to flow to new businesses and to developing countries, that would take a change in the direction of fiscal and monetary policies in the advanced economies,” said Malpass.
According to him, the world is facing a very challenging environment from advanced economies, which has serious implications and dangers for developing countries.
“My deep concern is that these conditions and trends might persist into 2023 and 2024.”
Source:OCN
