The World Bank has slashed its 2023 global economy growth outlook to 1.7% from its earlier projection of 3% and is warning of the risk of a global recession.
“Global growth has slowed to the extent that the global economy is perilously close to falling into recession,” the World Bank said this week, pointing to a cut in growth forecasts in most advanced countries and nearly 70% of emerging and developing countries.
The Bank’s global economic prospects report said measures to tackle inflation, including rising interest rates, along with high energy prices and China’s return to lockdown meant the economic outlook was much weaker than it had previously expected.
It revised growth in Europe and Central Asia downwards from 1.5% to 0.1%, while growth for the U.S. economy was pegged at 0.5% from an earlier projection of 2.4%.
The Bank said that the revised estimates would mark “the third weakest pace of growth in nearly three decades, overshadowed only by the global recessions caused by the pandemic and the global financial crisis.”
The Bank’s president, David Malpass said that the latest forecasts pointed to a long-lasting slowdown.
“The deterioration is broad based: in virtually all regions of the world, per capita income growth will be slower than it was during the decade before Covid-19. The setback to global prosperity will likely persist,” he said.
The effect of a possible global recession may have particular impact the Irish economy, which is heavily indebted, and is also reliant on global companies for significant proportion of its tax revenue.
Minister for Enterprise, Trade and Employment Simon Coveney warned yesterday that job losses might be in the offing, referring to lay offs in both Amazon and Goldman Sachs in the international context.
Weakening economic outcomes globally could cause a disproportionate dent in the government’s coffers, resulting in a shortfall in meeting significant commitments to housing and other spending focuses.