Inflation and the war in Ukraine will surely have a negative impact on global economic growth, as it is expected to slow to 1.7% in 2023, 1.3 percentage points lower than forecast last June, the World Bank said yesterday in its latest World Economic Outlook. This would be the third-lowest global growth in nearly 30 years.

The world is facing shocks such as high inflation, rising interest rates, sluggish investment and the Ukrainian crisis, growth is slowing “to the point that the global economy is dangerously close to falling into recession,” the report said.

The sharp decline reflects “a synchronized tightening of (monetary) policy to contain very high inflation,” as well as deteriorating financial conditions, declining confidence and energy disruptions, the Washington-based institution said.

It is clear that these are forecasts for 2023 and despite the fact that it will be a year barely less gloomy than those marked by a full recession in 2009 and 2020, the World Bank nevertheless expects a rebound in 2024 with a growth of 2.7%.

Going forward, the World Bank estimates that the developed economies will grow by 0.5% this year (compared to the 1.7% anticipated last June). For the eurozone, zero growth is expected, compared with the 1.9% previously forecast.

For emerging and developing countries, the institution expects a slowdown to 3.4%, 0.8 percentage points less than the June forecast.

The shock is significant, as the World Bank had predicted that global trade would grow by 1.6% in 2023, compared with forecasts six months earlier of 4.3%.