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World Bank fears risk of Global recession in 2023

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The world might be edging toward a global recession as central banks across the world simultaneously hike interest rates to combat persistent inflation, the World Bank said on Thursday.

The world’s three largest economies – the United States, China, and the euro area – have been slowing sharply, and even a “moderate hit to the global economy over the next year could tip it into recession,” the bank said in a new study.

The global economy is in its steepest slowdown following a post-recession recovery since 1970

The world’s three largest economies – the United States, China, and the euro area – have been slowing sharply

Consumer confidence dropped more sharply than in the run-up to previous global recessions

Synchronized interest rate hikes underway globally may not be enough to bring inflation back down to pre-pandemic levels

It said the global economy was now in its steepest slowdown following a post-recession recovery since 1970, and consumer confidence had already dropped more sharply than in the run-up to previous global recessions.

“Global growth is slowing sharply, with further slowing likely as more countries fall into recession,” World Bank President David Malpass said, adding his worry that these trends would persist, with devastating consequences for emerging market and developing economies.

Synchronized interest rate hikes underway globally and related policy actions were likely to continue well into next year, but might not be sufficient to bring inflation back down to levels seen before the COVID-19 pandemic, the bank said.

Unless supply disruptions and labor-market pressures subsided, the global core inflation rate, excluding energy, could stay at about 5.0pc in 2023, nearly double the five-year average before the pandemic.

To drive inflation lower, central banks may need to raise interest rates by an additional 2 percentage points, on top of the 2-percentage point increase already seen over the 2021 average, it said.

IMF sees further global economic slowdown

But an increase of that size, along with financial-market stress, would slow global gross domestic product growth to 0.5pc in 2023, or a 0.4pc contraction in per–capita terms, which would meet the technical definition of a global recession, it added.

Malpass said policymakers should shift their focus from reducing consumption to boosting production, including efforts to generate additional investment and productivity gains.

Previous recessions showed the risk of allowing inflation to stay elevated for long while growth is weak, the bank said, noting that the 1982 recession triggered more than 40 debt crises and ushered in a decade of lost growth in many developing economies.

World Bank Vice President Ayhan Kose said a recent tightening of monetary and fiscal policies would help cut inflation, but the highly synchronous nature of the measures could compound the situation and steepen the global growth slowdown.

The study suggested that central banks could combat inflation without touching off a global recession by communicating their policy decisions clearly, while policymakers should put in place credible medium-term fiscal plans and continue to provide targeted relief to vulnerable households.

 

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US Advocates for Palestinian Access to Al-Aqsa

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Al-Aqsa

On Wednesday, the United States called on Israel to permit Muslims to worship at the Al-Aqsa mosque compound in Jerusalem during Ramadan. This plea comes in response to a proposal by a far-right minister suggesting the exclusion of Palestinians from the occupied West Bank from praying at the site.

State Department spokesman Matthew Miller addressed reporters, stating, “As it pertains to Al-Aqsa, we continue to urge Israel to facilitate access to Temple Mount for peaceful worshippers during Ramadan consistent with past practice.” The statement emphasizes the importance of maintaining historical practices that have allowed peaceful worship during the holy month of Ramadan at the Al-Aqsa mosque compound, also known as the Temple Mount.

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Bangladesh Delegation Eyes WTO MC13 to Safeguard Developing Nations’ Interests

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The 13th Ministerial Conference (MC13) of the World Trade Organization (WTO) is scheduled to take place from February 26 to 29, 2024, in Abu Dhabi, United Arab Emirates (UAE). Ministers from around the world will gather to assess the performance of the multilateral trading system and address the future agenda of the WTO. A delegation from Bangladesh, led by State Minister for Commerce Ahsanul Islam Titu, comprising eight members, will participate in the conference.

This edition of the ministerial conference holds particular significance for Bangladesh as the country is set to transition from a Least Developed Country (LDC) to a developing nation by 2026. Typically held every two years, the conference will focus on critical global issues, including subsidies in agriculture and fisheries, intellectual property rights, e-commerce, and global food security.

Senior Secretary of the Commerce Ministry, Tapan Kanti Ghosh, expressed Bangladesh’s commitment to safeguarding the interests of LDCs and other developing nations. While not highlighting specific issues for Bangladesh, he emphasized the country’s desire to maintain duty-free market access, intellectual property rights, and other trade facilities during the post-LDC graduation period.

Tapan highlighted Bangladesh’s advocacy for the continuation of technical facilities, such as training programs for officials and dispute settlement mechanisms, even beyond the LDC graduation. He affirmed that Bangladesh would play a robust role in these discussions. Additionally, he underscored Bangladesh’s priority on providing subsidies in the fisheries sector during the post-LDC graduation period.

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Saudi Imposes Tk15 lakh Fine for Unauthorized Hajj Performances

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Saudi Arabia

The Ministry of Hajj and Umrah in Saudi Arabia has declared a fine of SR50,000 (equivalent to Tk15 lakh) for individuals, whether tourists or local residents, who perform Hajj without official permission. According to Gulf News, the ministry emphasized the illegality of undertaking Hajj without the necessary approvals. Additionally, hefty fines of up to Tk15 lakh will be imposed on those found transporting Hajj pilgrims without the required documents.

Furthermore, the ministry outlined severe consequences for foreigners involved in such violations, including a six-month imprisonment and subsequent deportation from Saudi Arabia. Those deported will also face a 10-year ban on reentering the country. This stringent announcement aims to ensure the proper implementation of the Hajj process and deter any potential breaches of laws and regulations.

The penalties will be enforced through collaboration between the Ministry of Hajj and Umrah and Saudi Arabia’s General Directorate of Passports.

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