World Bank offers dim outlook for global economy in face of higher interest rates

The World Bank estimates that the international economy will expand just 2.1% in 2023 after growing 3.1% in 2022

The global economy is likely slowing sharply this year, hobbled by high interest rates, the repercussions of Russia’s invasion of Ukraine and the lingering effects of the coronavirus pandemic.

The Federal Reserve and other major central banks have been aggressively raising interest rates to combat a resurgence of inflation, set off by a stronger-than-expected rebound from the pandemic recession, persistent supply shortages and energy and food price shocks caused by the Ukraine war. The United States has continued to generate unexpectedly robust job gains – employers added 339,000 workers in May, far more than economists had forecast – even though the Fed has raised its benchmark rate 10 times in the past 15 months. In its report Tuesday, the World Bank upgraded its forecast for U.S. economic growth this year to 1.1 per cent. Though weak, that is more than double the growth the World Bank had envisioned in January.

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