(FiveNation.com)- David Malpass, the World Bank’s president, warned this week that a global recession is looming sometime in the next 10 years.
According to a recent report in the BBC, Malpass adjusted down his prediction for growth in the world economy for 2023. Back in June, he said he expected the world economy to grow by 3%, but now he expects that to be closer to 1.7%.
Reasons for that adjustment are the “devastating” and long-lasting legacy of the COVID-19 lockdowns, rising interest rates across the globe, out-of-control inflation and the war in Ukraine with Russia.
Malpass further said that the economic downturn ahead would be “broad based.” He said individual incomes would grow at a slower rate “than it was during the decade before COVID-19.”
He isn’t the only prominent global figurehead who gave a recent prediction like this, either. Appearing on the “Face The Nation” program on January 1, Kristina Georgieva, the managing director of the International Monetary Fund, said 2023 would likely be “a tough year, tougher than the year we leave behind.”
She said her beliefs are based on the fact that three of the largest economies in the world are “all slowing down simultaneously,” referring to China, the European Union and the United States.
As she said on the program:
“That translates into negative trends globally. When we look at the emerging markets in developing economies there, the picture is even direr. Why? Because, on top of everything else, they get hit by high interest rates and by the appreciation of the dollar. For those economies that have high level of that, this is a devastation.”
For a while now, many economists have been concerned “higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic, or escalating geopolitical tensions could push the global economy into recession.”
The World Bank said that in the last 20 years, slowdowns like this have almost always foreshadowed a recession on a global scale. The organization further said it was trying to brace for “a sharp, long-lasting slowdown.”
As Malpass explained:
“The crisis facing development is intensifying as the global growth outlook deteriorates. Weakness in growth and business investment will compound the already-devastating reversals in education, health, poverty and infrastructure and the increasing demands from climate change.”
A report in the Telegram also said that if these projections about the global recession end up coming to pass, it would mark the first time since back around World War II that two global recessions happened in one decade.
Many economists have foreshadowed for a while that a recession is coming up for the United States in 2023, or not long after it. Just how bad that recession will be is what’s more in debate than whether a recession will happen at all.
And if the U.S. economy goes into a recession, it’s very possible that many other countries could be at risk of doing the same not long after.