World Bank President David Malpass and IMF head Kristalina Georgieva are warning that as central banks hike rates into stalling growth, they risk plunging the world economy into a global recession.

At a joint virtual discussion on Monday, Malpass stated, “There’s a risk and real danger of a world recession next year,” noting that currencies are depreciating in developing eonomies, as growth slows in advanced economies. He added, “Development efforts are facing a crisis amid a vast array of problems.”

Georgieva noted that, “the risk of recession has increased,” as nations which are responsible for a third of the wordl’s GDP are all showing  signs they are at risk of falling into a recession. She added that in her opinion, it was possible those countries would show negative growth in the final quarter of 2022, and the first quarter of 2023.

The IMF has estimated the economic slowdown so far may end up costing the global economy as much as $4 trillion by 2026. That is equal to the GDP of Germany. However, Georgieva noted inflation clearly does have to be brought under control, and cannot be left like a “runaway train.”

As rising global energy prices have combined with the loose monetary policies of the pandemic and triggered inflation across the global economy, central banks have responded with aggressive monetary policy moves designed to tighten their money supplies. The US Federal Reserve has implemented three consecutive 0.75% rate hikes, as the European Central Bank hiked rates by 50 basis points in July, and an unprecedented 75 basis points last month. The Bank of England implemented the steepest hike in over 20 years in August, which brought its benchmark rate up to 1.75%. It was the sixth rate hike since December.