- Italy targets climate activists in 'anti-Gandhi' demo clampdown
- US trade chief defends tariff hikes when paired with investment
- EU court blocks French ban on vegetable 'steak' labelling
- Meta AI turns pictures into videos with sound
- US dockworkers return to ports after three-day strike
- DR Congo to begin mpox vaccination campaign Saturday in east
- Meta must limit data use for targeted ads: EU court
- Oil extends gains, jobs report lifts Wall Street
- US hiring soars past expectations in sign of resilient market
- As EU targets Chinese cars, European rivals sputter
- Top EU court finds against FIFA in key transfer market ruling
- Oil extends gains, Hong Kong stocks resume rally
- 'A man provides': Ukrainian miners send families away as Russia advances
- EU states greenlight extra tariffs on EVs from China
- Hong Kong stocks resume rally, oil dips after Middle East-fuelled surge
- Crude stable after Israel-Iran surge, Hong Kong stocks resume gains
- Hera spacecraft to probe asteroid deflected by defence test
- US dockworkers to head back to work after tentative deal
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- What next for OpenAI after $157 billion bonanza?
- Israel-Hamas war causes 86-percent dive in Gaza GDP: IMF
- Milan's Morata moves house after Inter-fan town mayor 'violates' privacy
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- Biden says 'discussing' possible Israeli strikes on Iran oil facilities
- Oil prices rise, stocks fall on Middle East tensions
- Oil rallies, stocks mostly retreat on Middle East tensions
- Phasing out teen smoking could save 1.2 mn lives: study
- 'Welcome relief': Asia producers hail EU deforestation law delay
- Japan PM slated to announce plans for 'happiness index'
- Turkish inflation falls less than expected in September at 49.4%
- Easing inflation lifts profit at UK supermarket Tesco
- Skiing calls on UN climate science to combat melting future
- China wine industry looks to breed climate resilience
- Tokyo rallies on weak yen, Hong Kong drops after surge
- Dutch airline KLM unveils 'firm' cost-cutting measures
- Carpe diem: the Costa Rican women turning fish into fashion
- Senegal looks to aquaculture as fish stocks dwindle
- Will AI one day win a Nobel Prize?
- Climate change, economics muddy West's drive to curb Chinese EVs
- Argentina's Milei vetoes university budget after huge protests
- TotalEnergies plans to grow oil and gas production until 2030
- 2024 Nobels offer glimmer of hope as global crises mount
- Tokyo rallies on weak yen, Hong Kong reverses after surge
- Tunisia readies for vote as incumbent Saied eyes victory
- High childcare costs in US weigh on women's employment
- US voters seek help with crushing childcare costs
- Taiwan shuts down for second day as Typhoon Krathon to land
World Bank warns recession risk rising amid higher interest rates
The threat of a global recession is growing as central banks focus on bringing down soaring inflation rates, the World Bank warned Thursday, calling on governments to help boost supply to ease the constraints behind rising prices.
Inflation worldwide has been rising at the fastest pace seen in decades, due to supply constraints amid high demand as countries emerged from the pandemic. It has been exacerbated this year by the Russian invasion of Ukraine and Covid lockdowns in China.
Major central banks have responded forcefully, raising borrowing costs to cool demand and douse red-hot inflation.
But in a new paper, World Bank economists warned that the actions may not be enough to bring high prices under control, leading to a need for more interest rate hikes, which in turn will put the brakes on growth.
Many countries will not be able to avoid a 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 scenario, global GDP growth would slow to 0.5 percent in 2023 -- a 0.4 percent contraction in per capita growth, meeting the technical definition of a global recession.
"Global growth is slowing sharply, with further slowing likely as more countries fall into recession," World Bank President David Malpass said in a statement.
"My deep concern is that these trends will persist, with long-lasting consequences that are devastating for people in emerging market and developing economies."
He urged policymakers to "shift their focus from reducing consumption to boosting production."
The World Bank in early June slashed its forecast for global growth to 2.9 percent, more than a full point lower than the estimate in January.
- Not all doom and gloom -
Indermit Gill, the newly installed chief economist at the Washington-based development lender, said his biggest concern is that because of the slowdown and pandemic crisis, "poverty reduction has stopped."
But he expressed some optimism as well.
"It's not an all doom and gloom story," he told reporters, noting that because of work done to improve economic policies and management before the pandemic, countries are better able to protect the poor.
"I have the feeling that we will come out on the right side of this because the world has changed now and you know, there's a lot more capability around," he said.
The worst case scenario described in the paper Thursday would entail a recession in advanced economies and sharp declines in growth in emerging and developing economies.
"The global economy is now in its steepest slowdown following a post-recession recovery since 1970," the World Bank said.
"Under the circumstances, even a moderate hit to the global economy over the next year could tip it into recession."
D.Philippon--CPN