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World Bank warns global slowdown risk as inflation could rise

The World Bank said the worst case could mean global growth of 1.3% alongside inflation reaching 4.5%, a mix that could keep interest rates higher for longer.

Reported · Written up by our desk · Major Pairs

The World Bank warned that the global economy is only months away from a worst case scenario in which growth slows to 1.3% while inflation climbs to 4.5%, Chief Economist Indermit Gill said, according to comments reported by Reuters.

The institution said the risk is tied to possible escalation of the Middle East conflict and additional supply disruptions that could intensify inflation pressures and keep interest rates higher for longer.

Gill also noted that debt vulnerabilities have built up over time, leaving developing economies more exposed, with some countries potentially requiring debt relief.

FXStreet said financial markets reacted with a muted tone to the comments, with the US Dollar Index hovering around 101.15 as of Wednesday and little change on the day.

Latest closeDollar index 101.12 ▼0.1%

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