A sustained rise in interest rates would be disastrous for developing countries, the World Bank said

Slowing global growth could push more countries into recession, World Bank (Photo File)

Islamabad: The World Bank has warned that the continuous increase in interest rates by central banks will have disastrous consequences for developing countries.

In the recent research paper released by the World Bank about the changing global economic situation, it has been stated that the global recession is due to the increase in interest rates by the international central banks to prevent the increase in inflation. The market is likely to grow and if this trend persists, emerging markets and developing countries will face disastrous consequences.

According to the World Bank, more countries may face recession as a result of slowing global growth. The 3 major economies like USA, China and Eurozone are suffering from economic slowdown very fast and the risk of recession will also increase due to the impact of the global economy during the next one year.

The research report further states that the trend of increase in interest rates at the global level is likely to continue while related policy measures will not be possible to bring the inflation to the pre-Covid-19 level.

The report said that central banks would have to raise interest rates further to bring down inflation, but doing so would put financial markets under further pressure, which could lead to global GDP falling to 0.5 or 0.4 percent in 2023, which That would signal a global recession.

According to the World Bank, recent tight monetary and fiscal policies will help bring down inflation, but will slow down global growth.

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