Two global recessions in one decade? This has not happened for over 80 years.

The global economy is just one step away from a second recession in the same decade, something that has not happened for over 80 years.

This is the latest warning from the World Bank, which on Tuesday (10th) drastically reduced its forecast for global economic growth.

The bank now projects that the world economy will grow just 1.7% this year, hitting developing countries that have already been hit hard by the pandemic and rising interest rates. He projects that growth will return to 2.7% in 2024.

“The crisis facing development is intensifying as global growth prospects deteriorate,” World Bank President David Malpass said in a statement.

High inflation, aggressive central bank policy, deteriorating financial conditions and the shock waves from Russia’s invasion of Ukraine are weighing on growth.

As a result, “further negative shocks” – from higher inflation and even tighter monetary policy to an increase in geopolitical tensions – could be enough to trigger recessionary conditions, according to the World Bank.

The global economy shrank by 3.2% during the 2020 pandemic recession, before rebounding strongly in 2021. The world last experienced two recessions in the same decade, in the 1930s.

The organization said it expects the US economy to grow by just 0.5% in 2023. The 20 countries that use the euro, which have been hit hard by the war in Ukraine, are unlikely to see any aggregate expansion. Both predictions are much lower than in June 2022.

Reflections of Covid-19

Growth in China is forecast to pick up in 2023 after the end of Covid-19 restrictions, rising to 4.3%. But that forecast was also down from six months ago, reflecting continued instability in the country’s real estate market, weaker demand from other countries for Chinese-made goods and ongoing disruptions from the pandemic.

“The world’s three main engines of growth – the United States, the Eurozone and China – are experiencing a period of pronounced weakness,” the World Bank said in its report.

This retreat will also affect the poorest countries, which are already feeling the effects of an uncertain economic climate, lower business investment and rising rates. Rising borrowing costs can make dealing with high levels of debt more challenging.

By the end of 2024, economic output in emerging markets and developing economies will be around 6% below levels mapped before the pandemic, according to the World Bank. Income growth is also expected to be slower than average in the pre-Covid decade, making it harder to close the gap with wealthier nations.