World Bank President David Malpass warned October 13 that the global economy is nearing the brink of recession and called for targeted support for low-income people. He said the World Bank had cut its global growth forecast for 2023 from 3 per cent to 1.9 per cent.
He said inflation, rising interest rates and disruptions have caused a series of problems, including capital flows in developing countries, that have hit low-income people hard. These issues pose huge challenges for the World Bank. Mr Malpass said: “We have always been focused on helping people succeed in developing countries. Some countries are already raising interest rates, and may have reached a point where they do not need to go further. “According to Malpass, the increase in developing country debt is mainly due to high interest rates; As the amount of debt itself increases, their currencies tend to fall. Devaluation further increases the debt burden.
In a study published in mid-September, the World Bank warned that the world could inch toward a global recession in 2023, with growth forecasts of just 0.5%, as central banks around the world simultaneously raise interest rates to combat inflation. Mr Malpass defines the global macroeconomic situation as a “perfect storm” that could lead to stagflation — high inflation and little or no growth.