Published by: Rhina Ruth T. Galano
Date published: September 19, 2022
Time published: 8:51 AM
On September 15, 2022, the World Bank warned about the threat of a global recession in growth as central banks duly focus on bringing down soaring inflation rates, alarming governments to take action with policies to boost supply and ease the constraints behind rising prices.
Worldwide inflation continues to rise at the fastest pace in decades due to supply constraints amid high demand as countries emerge from the pandemic, aggravated by the Russian invasion of Ukraine during this year, and are affected by the COVID-19 lockdowns in China.
Major central banks have responded forcefully, raising borrowing costs to cool demand and stamp out inflation.
However, in a new paper, World Bank economists warn that these actions may not be enough to put high prices under control, which would require more interest rate hikes.
Numerous countries will not be able to avoid recession, but the worldwide slowdown and tightening monetary policy "could give rise to significant financial stress and trigger a global recession in 2023," the paper said.
In that case, global GDP growth would slow down to 0.5 percent in 2023 – a 0.4 percent contraction in per-capita growth that leads to the technical definition of a global recession.
World Bank President David Malpass mentioned that global growth is moving at a slower pace as more countries fall into recession. He added that his deep concern is that this crisis will persist with major consequences—even regardless of how advanced a country’s economy is—and will devastate people from emerging markets and developing economies as intense declines in growth will be present.
Malpass urged policymakers to "shift their focus from reducing consumption to boosting production."
The world bank stated that "the global economy is now in its steepest slowdown following a post-recession recovery since 1970."
"Under the circumstances, even a moderate hit to the global economy over the next year could tip it into recession," they added.
Source: ABS-CBN News.
Photo source: Canva
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