IMF, World Bank warn of increasing risk of global recession

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By Suraj Bediya

A worldwide financial recession is becoming more likely as a result of economic headwinds, the leaders of the International Monetary Fund (IMF) and the World Bank said on Monday.

“There’s the risk and the real danger of a world recession next year. The advanced economies are slowing in Europe, so we’ll see where it goes into next year,” World Bank Group President David Malpass told IMF Managing Director Kristalina Georgieva during their discussion.

“But the currency depreciation means that the debt levels for the developing countries are getting increasingly burdensome,” Malpass said. “The rise in interest rates puts added weight on it. And inflation is still a major problem for everyone, but especially for the poor.”

Georgieva mentioned that the IMF estimated that this year, one-third of the global economy will have seen at least two quarters of negative growth, with the slowdown costing the economy $4 billion between now and 2026.

All three of the world’s major economies are slowing down, she said. “Eurozone, especially due to the sharp increase in petrol costs. We observe a major issue in China that is slowing down growth because of COVID disruptions and the unpredictability of the property market, Georgieva said. “And in the United States, the job market is still quite strong, but it is also losing some impetus as interest rates begin to rise.”

The Federal Reserve has been gradually raising interest rates throughout this year to reduce record inflation, which has sparked worries that the United States may be headed for a recession. Malpass and Georgieva’s comments coincide with this trend.