World Bank warning
Last Thursday, the World Bank issued a press release warning of the risks of a global recession, with the Bank cautioning that leading central banks risk sending the global economy into a ‘devastating’ recession next year if policymakers raise interest rates too high over the months ahead and stress financial markets. The Washington-based organisation called on monetary authorities in leading economies to co-ordinate their actions to reduce the overall amount of tightening.
World Bank Group President David Malpass commented, “Global growth is slowing sharply, with further slowing likely as more countries fall into recession. My deep concern is that these trends will persist, with long-lasting consequences that are devastating for people in emerging market and developing economies.” He continued, “To achieve low inflation rates, currency stability and faster growth, policymakers could shift their focus from reducing consumption to boosting production.
Policies should seek to generate additional investment and improve productivity and capital allocation, which are critical for growth and poverty reduction.”