Simultaneous interest rate hikes by central banks to fight inflation increase the risk of a global recession in 2023, the World Bank said on Thursday, while arguing the need to curb price rises, AFP reported.

Key rates at the world’s central banks have risen by an average of 2% since 2021, but at least an equivalent increase may be needed to bring inflation back to target, according to research by the institution.

However, such growth risks leading to a further slowdown in global economic activity, the World Bank notes, with growth of just 0.5% in 2023, corresponding to a 0.4% reduction in GDP per capita.

“Global growth is slowing sharply and will continue to slow as more countries fall into recession. I am concerned that this trend will continue with devastating long-term consequences for emerging and developing countries,” the World Bank president said, citing David Malpass. in the application.

In early June, when it released its global economic forecast, the World Bank still projected global growth below 3% for 2023 and 2024 due to the effects of the war in Ukraine.

A changing geopolitical environment and persistent inflation, no longer driven solely by energy and food prices, are already having a profound impact on the economy.

“We lowered our overall growth forecasts for all countries except commodity exporters. And we cut our forecast for the global economy by a third,” the organization’s chief economist, Indermit Gill, said at a press conference.

However, the International Financial Organization is urging central banks to continue their efforts to reduce inflation to avoid socio-economic risks if prices continue to rise.

To limit the impact on economic growth, the World Bank calls for coordinated monetary and fiscal policy actions, as well as for strengthening supply chains and avoiding fragmentation of the global economy.

Finally, Malpass urges governments to implement supply-side policies by boosting investment and productivity.