World Bank Report: "Blinking Signs" of Global Recession World Will Face Recession Next Year

The world could face a recession next year as central banks around the world simultaneously tighten monetary policy, the World Bank said in a new report.

Several indicators of a global slowdown are already "flashing signs," the report said. The global economy is now in its steepest recession since the post-1970 recession recovery, the report added.

Global interest rate hikes by central banks could reach 4 percent in 2021 to keep core inflation -- which keeps volatile items such as food and fuel -- at 5 percent.

From the US to Europe to India, countries are aggressively raising lending rates, aimed at stemming the supply of cheap money and thereby reducing inflation. But such monetary tightening comes at a cost. This slows investment, costs jobs and stifles growth, a trade-off that most countries, including India, face.

“Global growth is slowing sharply and is likely to slow further as more countries fall into recession. Manufacturing activity and auto markets stall or continue to fluctuate. Fuel shortages and price hikes in markets like Europe are hitting the industry back. Explosive prices and lack of availability of construction materials in the markets, availability of houses and increase in rent are just the preparations for this. Most of the banks raised the interest rates by a good percentage, and this almost disrupted the housing market.

The prices of many commodities have soared. Most European countries are grappling with the Ukraine refugee crisis. The war made a large number of people refugees. With the onset of winter, large numbers will have to be moved to Europe to escape the bitter cold, so the price will not go down, it will only go up.

"My deepest concern is that these trends will persist, with devastating long-term consequences for people in emerging market and developing economies," World Bank President David Malpass said in a statement after the report was released on Thursday.

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