The World Bank has issued its 2023 global economic predictions report, called Global Economic Prospects, and it sees the global economy growing just 1.7% for the year. The prediction cuts last year’s forecast by half, pointing to broadly worsening economic conditions in multiple national economies.

Nearly all of the Washington-based institution’s predictions for the most advanced economies were cut in the report. As recently as last June, the World Bank’s analysts were predicting this year the global economy would see 3% growth.

The primary driver of the massive downgrade in the global forecast was changes in expectations the World Bank set for the U.S. economy. Previously the bank forecast U.S. GDP would increase by 2.4%, however changing conditions prompted a downgrade of the expectation to 0.5%.

In the report, the World Bank wrote, “The United States, the euro area, and China are all undergoing a period of pronounced weakness, and the resulting spillovers are exacerbating other headwinds faced by emerging market and developing economies.”

The bank also slashed China’s growth outlook from 5.2% to 4.3%, while it predicted Japan would exhibit a growth rate of only 1%, compared to the previously projected 1.3%. Europe and Central Asia also saw their growth outlooks cut by the bank from 1.5% to 0.1%.

The World Bank report went on, “Global growth has slowed to the extent that the global economy is perilously close to falling into recession,” with the sluggish growth due to an “unexpectedly rapid and synchronous” constriction of global monetary policy.

The forecasts mark, “the third weakest pace of growth in nearly three decades, overshadowed only by the global recessions caused by the pandemic and the global financial crisis.”

The World Bank’s analysts note that the biggest factor affecting the global economic outlook is the sudden imposition of hawkish monetary policy by central banks across the globe, which they note has, “contributed to a significant worsening of global financial conditions, which is exerting a substantial drag on activity.” However they concede that the higher interest rates produced by those central banks may have been required to prevent soaring inflation from adversely affecting the global economy in other ways.