World Bank President warns of rising risk of global recession

World Bank (WB) President David Malpas said the risk of a recession in the global economy has increased over the past three weeks, informed TASS.

“As you know, there is always some risk of a recession. What we see is a change in scale,” the WB president said when asked about the increase in such risk. He also noted a strong decline in the yield of two-year US Treasury bonds.

“On the one hand, this is good, because we want lower interest rates. But, of course, don’t we want this in the context of rapid growth? <...> You need to replace stagflation with more output at a lower interest rate, which will keep you growing in the future,” Malpas said. According to him, the fall may be due to concerns about the bankruptcy of a number of banks.

In October 2022, Malpas and International Monetary Fund (IMF) Managing Director Kristalina Georgieva also declared about the risk of a global recession. Then Malpas noted the “real danger” of a slowdown in the global economy in 2023.

On October 2 of the same year, WB economists in an analytical note “Is a global recession inevitable?” reported that the global economy in the next two years could face the “steepest recession” since the 1970 crisis, while Bloomberg analysts predict a crisis similar to the 2009 recession.

According to a new WB report from January 2023, global economic growth will slow to 1.7% this year, which is a 1.3 p.p. deterioration of the June 2022 forecast. According to the bank, this is due to the tightening of monetary policy by some countries and interruptions in supplies.