President Of The Wanti-Wanti World Bank, Global Economy Is Very Close To Recession

Illustration. (Photo: Unsplash)

JAKARTA - World Bank President David Malpass said the global economy was "very close" to a recession, as inflation remained high, interest rates rose, and an increasing debt burden hit developing countries. "We have lowered our 2023 growth forecast from 3.0 percent to 1.9 percent for global growth, it is very close to the world recession," Malpass said at a press conference during the annual meeting of the IMF and World Bank. "All the problems that people pay attention to, inflation issues, rising interest rates, and terminating capital flows to developing countries really hit the poor," he said, highlighting the buildup of debt from developing countries. "It is a world recession that can occur under certain circumstances," said Malpass. In a study published in mid-September, the World Bank warned that as central banks around the world simultaneously raise interest rates in response to inflation, the world may lead to a global recession in 2023, with an estimated growth of only 0.5 percent. The President of the World Bank noted at a press conference that world population growth is estimated at 1.1 percent per year. "So if world growth is much slower, that means people will step down," Malpass said in response to a question from Xinhua. Citing a recent World Bank report, Malpass said that the COVID-19 pandemic had provided the biggest setback for efforts to reduce global poverty since 1990, pushed some 70 million people into extreme poverty by 2020, and the war in Ukraine threatened to exacerbate the situation. According to the Joint Poverty and Prosperity Report, global median revenue fell 4.0 percent in 2020, the first decline since median revenue measurements began in 1990. "So if we experience a world recession now, it will also suppress average income, which means that the people at the bottom of the revenue scale will drop," Malpass said. The head of the World Bank also noted that he was concerned about the concentration of capital in the world at the top end of developed countries. "So, in my opinion, one of the problems the world has to face is to allow capital to flow into new businesses and into developing countries, which will change the direction of fiscal and monetary policies in developed countries," said Malpass. "The world faces a very challenging environment from the developed economy, and it has serious implications, a danger to developing countries," he said. "My deep concern is that these conditions and trends may last until 2023 and 2024," he concluded.