WASHINGTON—The World Bank sharply lowered its growth forecast for the global economy this year as persistently high inflation has elevated the risk for a worldwide recession.
The bank expects global growth to slow to 1.7% in 2023, down from an estimate of 3% growth in June. That would mark the third-weakest pace of global growth in nearly three decades, overshadowed only by the 2009 and 2020 downturns, according to the World Bank. A separate report showed that global inflation, while starting to cool, remains historically high.
The forecast growth rate only narrowly keeps the global economy out of recession territory. The international development organization cited a coalescence of high inflation, rising interest rates, lower investment and Russia’s invasion of Ukraine as threats to growth, along with pandemic-related disruptions in China and stress in its real-estate sector.
“Global growth has slowed to the extent that the global economy is perilously close to falling into recession,” the World Bank said in its latest report on global economic prospects.
Other economists have projected that both the U.S. and parts of Europe could slip into a recession for a portion of 2023. A global recession, defined as a contraction in annual global per capita income, is more rare because China and emerging markets often grow faster than more developed economies. Essentially the world economy is considered to be in recession if economic growth falls behind population growth.
For all of 2023, the World Bank forecasts U.S. gross domestic product will increase 0.5% from the prior year, and expects no growth for the eurozone. The bank predicts China’s GDP will increase 4.3% in 2023 from the prior year, an uptick from an estimate of 2.7% growth last year. Emerging market and developing economies are projected to expand 3.4%, a steady rate of growth from 2022’s expansion.
Russian GDP is forecast to contract 3.3% after falling 3.5% in 2022, as…
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