Fragile Global Economy At Risk Of New Recession, Says World Bank

Any fresh setback to a global economy already rapidly weakening as a result of high inflation, interest rates and war could result in a second recession within three years in 2023, the World Bank has warned.

- Larry Elliott

In its half-yearly health check, the Washington institution said it had cut its 2023 growth forecast from 2.9% to 1.7% after risks identified six months ago all materialised.

The Bank's global economic prospects report said tougher than anticipated anti-inflationary measures, persistently high energy prices, and continued lockdowns in China had led to a much weaker outlook for this year than it had expected last summer. Almost every advanced country and nearly 70% of emerging and developing countries have had their growth forecasts cut.

Given its fragility, the Bank said any new adverse development - such as higher-than-expected inflation, abrupt rises in interest rates, a resurgence of Covid-19 or escalating geopolitical tensions - could push the global economy into recession. Not since the 1930s have two global recessions occurred in the same decade.