The world is under the shadow of recession; World Bank warning; Result of aggressive rate hike by central banks

Washington: Aggressive interest rate hikes are being taken by central banks around the world to curb inflation. The World Bank warned on Thursday that the global economy could face a recession next year as inflation hit a five-decade high.

Interest rate measures are insufficient to curb inflation and instead have the effect of slowing the global economy, according to a World Bank note released on Thursday in Washington. Policy makers around the world have shifted their priority from growth to inflation control. However, this will lead to more adverse effects on the economy than expected, Tipana expressed apprehension.

To keep inflation at 5 per cent, central banks will increase interest rates by an average of four per cent next year. This increase will be double compared to 2021. According to the note, if central banks try to keep inflation at their tolerance level, then the average interest rate will increase to 6 per cent. Global gross domestic product (GDP) will fall 0.5 percent in 2023, and per capita income will decline by 0.4 percent. By technical definition, this would be the beginning of a global recession. This is the latest warning from the World Bank that after achieving record growth rates in 2021, global growth will slow again before returning to pre-coronavirus levels.

Instead of reducing consumption, the priority of policy makers should be to increase production. World Bank Group President David Malpass said additional investment, increased productivity and strong capital management are critical to global growth and poverty reduction.

Its authors, World Bank economists Justin-Damien Gunnett, M. The extension has been suggested by Ihan Kos and Naotaka Sugawara.

For more Business updates, Click here.

Leave a Comment