World Bank Warns Stimulus Spending And ‘Dangerous’ Debt Crisis Could Trigger Recession And Wipe Out A Decade Of Income Gains

UNPRECEDENTED government spending has helped ward off a grave economic depression in nations around the world, but the debt load governments like the U.S. are taking on to fund such stimulus measures could stall economic growth for years to come, the World Bank warned Tuesday, echoing concerns among experts worried inflation could trigger another recession.

Key Facts

Global economic output, as measured by worldwide GDP, is expected to increase 4% in 2021, the World Bank said in a Friday report, marking a nearly complete recovery after a 4.3% contraction in 2020 as the pandemic forced tens of millions of people into poverty and nearly stalled economic activity.

The World Bank predicts slowed growth of 3.8% in 2022 that could get worse if countries don’t reinvest assets to become less dependent on their surging debt loads. 

Propping up the economy has come at a high cost: The World Bank notes that