World on the Brink of New Crisis: Impact Projection Predicts Catastrophe

(Patria) - The World Bank warned on Sunday that the crisis in the Red Sea and the Middle East threatens to increase interest rates, slow economic growth, inflation, and general geopolitical instability.

In its latest report on the global economic situation, the World Bank concluded that the wars in the Middle East and Ukraine have caused real damage.

- An escalation of conflicts could result in an increase in energy prices and accelerate inflation again.

Other risks include: financial stress associated with rising interest rates, slower than expected growth of the Chinese economy, further erosion of trade, and climate disasters.

- The ultimate consequence of the recent attacks on merchant ships in the Red Sea is an increase in commodity prices and increased geopolitical and economic uncertainty, which will weaken investment - the World Bank report states.

John Llewellyn, former chief economist of the OECD, said:

- The situation in the Red Sea has become a serious problem. It is inevitable that crisis situations will also occur in other areas, for example, the Strait of Hormuz and the wider Middle East - warned Llewellyn, after the probability of serious disruptions in world trade increased from 10 to 30 percent in just seven days, The Guardian writes.

Economists also fear that many major world economies could enter a recession during 2024.

They also fear that central banks will not sufficiently hinder borrowing, which will contribute to the rising cost of living, while on the other hand, interest rates will remain extremely high due to the price of oil.