World Bank Signals A Global Recession, Saying ‘Essentially No Rebound’ Is Expected With Several Years Of ‘Above-Average Inflation’ Ahead

According to the World Bank’s latest global economic forecast released on Tuesday, global economic growth is expected to slow down before the end of the year, and most countries should begin preparing for a recession.

In the newly released report, the World Bank cut its forecast for global growth this year to 2.9%, down from the 4.1% forecast published in January. The report also warns that several years of above-average inflation lie ahead. 

Both inflation and slow growth are putting world economy at risk … ⁦@WorldBank⁩ has cut its 2022 forecast from 4.1% in January, to 3.2% in April, to 2.9% most recently, amid surge in food & energy prices, supply disruptions and central banks’ tightening
⁦@Bloomberg⁩ pic.twitter.com/AJ9ymUTadh

— Liz Ann Sonders (@LizAnnSonders) June 8, 2022

“Both inflation and slow growth are putting world economy at risk,” says Liz Ann Sonders, Chief Investment Strategist for Charles Schwab.

The World Bank cited the Russian invasion of Ukraine coupled with a still crippled, post-pandemic economy as a primary reason for its change. 

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The international financial authority said it expects “essentially no rebound” next year, projecting only 3% growth for the world in 2023. This comes as a direct signal for an impending global recession.

The report highlighted the continuance of surging energy, rising food prices, and higher interest rates from central banks for a more cynical outlook.

“The global outlook faces significant downside risks, including intensifying geopolitical tensions, an extended period of stagflation reminiscent of the 1970s, widespread financial stress caused by rising borrowing costs, and worsening food insecurity,” the report states.

The World Bank reported that 100% of Advanced economies and 80% of Emerging and Developing countries are now experiencing above-target inflation. 

The World Bank reports 100% of Advanced economies, and 80% of Emerging and Developing countries now experience above-target inflation. At the same time WB cuts global GDP forecast to +2.9%. (Down from +3.2%)
That means: GLOBAL STAGFLATION.
ht #JimPerry pic.twitter.com/12ZPpmEmkT

— Ronnie Stoeferle (@RonStoeferle) June 8, 2022

The World Bank also downgraded growth prospects for the United States in 2022 to 2.6% from the 3.8% it predicted in January.

The World Bank advised governments to soften the blow from soaring energy and food prices. The group suggested easing financial burdens by expanding debt relief.

The World Bank report cautioned that if geopolitical conditions do not begin to improve, “global growth could be substantially weaker.”