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Global Economy The World Bank faces a growing threat of recession next year as central banks around the world raise interest rates at an aggressive clip to tame inflation, the World Bank said in a new report.

The Washington-based body said growth in the world’s three largest economies – the US, China and the European Union – has already slowed sharply this year.


It warned that there could be a “moderate hit” on the global economy next year. drag it into recession,

“Global growth is slowing rapidly, and is likely to slow further as more countries fall into recession,” said David Malpass, president of the World Bank Group. “My deep concern is that these trends will persist with long-lasting consequences that are disastrous for people in emerging markets and developing economies.”

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The World Bank noted that while ongoing synchronous interest rate hikes globally are likely to continue well into the next year, but may not be enough to bring inflation down to pre-pandemic levels.

in America, Federal Reserve Policy Maker The benchmark interest rate has been raised four times in a row and is set to approve another sizable rate hike next week. Central banks in England and the European Union have also raised rates.

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Fed Chairman Jerome Powell has indicated that officials will continue to raise rates, even if it drives unemployment higher, in bullish markets.

The report showed investors expect central banks to raise interest rates to around 4% next year, although rates could eventually climb to 6%.

Fed Chairman Jerome Powell

But until the supply chain disruptions end and labor market pressures ease, main global inflation rate, The World Bank said that which excludes the more volatile measure of energy, is likely to be around 5% in 2022. This is almost double the pre-pandemic average.

The study forecasts that by 2023 global GDP, the largest measure of goods and services produced in a country, will slow to 0.5% after a record expansion last year. This would meet most definitions of a technical recession because average global earnings would be falling.

US economy

“Policy makers can shift their focus from reducing consumption to increasing production,” Malpass said. “Policies should generate additional investments and improve productivity and capital allocation, which are critical to growth and poverty reduction,

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The World Bank encouraged central bankers to clearly state their policy actions, suggesting that doing so could help them avoid a recession.