On Thursday, the World Bank said that the world is likely to witness a global recession as central banks across the globe simultaneously hike interest rates to combat ongoing inflation.

It reported that the world’s three largest economies – the United States, China, and the euro area – have been slowing sharply. It said that even a moderate hit to the global economy could result in recession.

The World Bank has also stated that consumer confidence has already fallen sharply. According to David Malpass, President of the World Bank, these trends would lead to devastating consequences for emerging markets and developing economies.

He further said that synchronised interest rate hikes and related policy actions might not be adequate to bring down inflation levels. The bank asserts that the global core inflation rate may persist at about 5 per cent in 2023 unless supply disruptions and labour-market pressures subsided. To lower inflation, central banks need to raise interest rates by an additional two percentage points.