World Bank lowers 2023 outlook, says the world is "perilously close" to recession

The World Bank lowered its global growth forecasts for 2023 on Tuesday, saying that the world is “perilously close” to a recession, the organization said in its latest Global Economic Prospects report. 

“Global growth has slowed to the extent that the global economy is perilously close to falling into recession,” the World Bank said, adding that an “unexpectedly rapid and synchronous” global monetary policy tightening was behind 

The international institution slashed its predictions for global GDP growth to 1.7% for 2023 after it had predicted that it would expand by 3% last year, in part due to the impact of central bank rate hikes, reduced investment, and the Russian war in Ukraine. 

The World Bank also lowered its prospects for several advanced countries in the world. The U.S. economy is now forecasted at 0.5% growth, compared to the previous projection of 2.4%. 

Similarly, China’s growth outlook for 2023 was slashed from 5.2% to 4.3%, Japan’s from 1.3% to 1%, and Europe and Central Asia's from 1.5% to 0.1%. 

“The United States, the euro area, and China are all undergoing a period of pronounced weakness, and the resulting spillovers are exacerbating other headwinds faced by emerging markets and developing economies,” the World Bank said. 

The new estimates mark “the third weakest pace of growth in nearly three decades, overshadowed only by the global recessions caused by the pandemic and the global financial crisis,” according to the report.