The global economy is "perilously close to falling into recession", according to the latest forecast from the World Bank.

It expects the world economy to grow by just 1.7% this year - a sharp decrease from the 3% it predicted in June.

The report blames a number of factors stemming from Russia's invasion of Ukraine and the impact of the pandemic.

The effects of higher interest rates are picked out as the key challenge for policy makers to overcome.

World Bank president David Malpass said the downturn would be "broad-based" and growth in people's earnings in almost every part of the world was likely to "be slower than it was during the decade before Covid-19".

The 1.7% growth figure would be the lowest since 1991, with the exceptions of the recessions of 2009 and 2020, which were caused by the global financial crisis and the Covid pandemic.

The World Bank said the US, the Eurozone and China - the three most influential parts of the world for economic growth - were "all undergoing a period of pronounced weakness", a downturn that was worsening the problems faced by poorer countries.

The 1.7% growth figure would be the lowest since 1991, with the exceptions of the recessions of 2009 and 2020, which were caused by the global financial crisis and the Covid pandemic.

Tackling rising prices

Higher inflation is one of the main reasons that the global economy is struggling. Global food and energy prices jumped last year as the war in Ukraine led to reduced crop supplies and pushed the West to move away from Russian fossil fuels.

The World Bank said it expected the global pace of price rises to slow from 7.6% in 2022 to 5.2% this year, as those pressures ease.

While some "prices spikes are possible". the bank said it expected energy prices to fall in general. It pointed to an increase in global production and lower demand in Europe, where an energy crisis has led businesses and households to reduce their use of gas.

Crop prices are also forecast to fall by 5% this year although they will still be significantly higher than they were a few years ago, having risen by 13% in 2022.