Washington: The world economies may fall into a global recession next year amid aggressive monetary policy tightening by central banks to tame inflation, the World Bank said.
Several historical indicators of global recessions are already flashing warnings, it said in a new study, adding that the global economy is now in its steepest slowdown, following a post-recession recovery since 1970. “As central banks across the world simultaneously hike interest rates in response to inflation, the world may be edging toward a global recession in 2023,” the World Bank said.
Aside from recession, a string of financial crises in emerging markets and developing economies is also likely to do them “lasting harm”, the report said. Global consumer confidence has already suffered a much sharper decline than in the run-up to previous global recessions. Major central banks around the world have been raising interest rates this year with a degree of synchronicity that has not been seen over the past 50 years, and this trend is likely to continue well into next year, according to the World Bank report.
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