The World Bank issued a bleak report this week warning that the growth outlook for 2023 appears to be ripe for a recession. The World Bank predicts that global growth will slow to 1.7% in 2023, down from 3% in June. If a recession occurs, it will be the first time since the 1930s that two global recessions occur in the same decade. The World Bank’s economic forecast for the United States has been reduced by 1.9 percentage points, from 2.4% to 0.5% growth in the coming year. Overall, 95% of advanced economies’ projections have been reduced from six months ago.
According to the IMF, a third of the global economy could experience a recession in 2023. Such low growth would be “the weakest performance outside official recessions since 1970”. The World Bank’s global economic outlook is positive, but it may be dragged down as spillovers from “the world’s three major engines of growth” (the United States, the eurozone, and China) exacerbate headwinds for EMDEs. As larger economies accelerate, the resulting “shockwaves” may drag smaller nations down with them. Meanwhile, the ongoing energy crisis caused by Russia’s invasion of Ukraine aggravates the situation.
