The World Bank on Tuesday slashed its global growth forecast by nearly a third, to 2.9% for 2022. Russia’s invasion of Ukraine and damage from the COVID-19 pandemic have made many countries face recession.
World Bank President David Malpass said global growth could fall by 2.1% in 2022 and by 1.5% in 2023. This could drive per capita growth close to zero. “The danger of stagflation is considerable today,” Malpass wrote in the foreword to the report. “Subdued growth will likely persist throughout the decade because of weak investment in most of the world. The pace of global growth is projected to slow by 2.7% between 2021 and 2024. This is more than twice the deceleration seen between 1976 and 1979.
Ayhan Kose, director of the World Bank unit that prepares the forecast, told reporters there was “a real threat”. A faster than expected tightening of financial conditions could push some countries into the kind of debt crisis seen in the 1980s.
To reduce the risks, Malpass said, policymakers should work to coordinate aid for Ukraine. Also, boost the production of food and energy. Lastly, avoid export and import restrictions that could lead to further spikes in oil and food prices. He also called for efforts to step up debt relief, warning that some middle-income countries were potentially at risk; strengthen efforts to contain COVID; and speed the transition to a low-carbon economy.
The bank forecast a slump in global growth to 2.9% in 2022, down from 5.7% in 2021. It said global inflation should moderate next year but would likely remain above targets in many economies.
REUTERS
