WASHINGTON D.C.: The World Bank has downgraded its global growth forecast for 2022 to 2.9 percent, warning that many countries are facing recession, and Russia’s invasion of Ukraine has intensified the damage caused by the COVID-19 pandemic.
In its Global Economic Prospects report, the World Bank said that Russia’s invasion of Ukraine, which could become “a protracted period of feeble growth and elevated inflation.”
During a news conference, World Bank President David Malpass said global growth could fall to 2.1 percent in 2022 and 1.5 percent in 2023, adding that global growth was being harmed by the Ukraine war, new COVID-19 lockdowns in China, supply-chain disruptions and record high inflation.
“The danger of stagflation is considerable today. Subdued growth will likely persist throughout the decade because of weak investment in most of the world. With inflation now running at multi-decade highs in many countries and supply expected to grow slowly, there is a risk that inflation will remain higher for longer,” Malpass wrote in the report’s foreword.
Global growth is forecast to slow by 2.7 percentage points between 2021 and 2024, more than twice the deceleration seen between 1976 and 1979, Malpass said.
The report also warned that interest rate increases required to control inflation at the end of the 1970s were so steep that they started a global recession in 1982, as well as a series of financial crises in emerging markets and developing countries.
In a statement to reporters, Ayhan Kose, the director of the World Bank whose office prepared the report, said there was “a real threat” that tightening financial conditions sooner than expected could push some countries into a debt crisis similar to those seen in the 1980s.
