The World Bank on Tuesday (7th) revised down its 2022 global economic growth forecast to 2.9%, and warned that Russia’s invasion of Ukraine will exacerbate the damage of the new crown epidemic, many countries may face economic recession, and the global economy has stagnated inflation. (stagflation) risk.
The World Bank forecast in January that the global economy would grow 4.1 percent this year, then slashed to 3.2 percent in April, and has now lowered it to 2.9 percent, citing soaring energy and food prices, supply chain disruptions caused by Russia’s invasion of Ukraine, and central banks around the world. Raise interest rates from their lowest levels.
Looking at the economic prospects of various countries this year, the World Bank’s forecast for the United States is 2.5% (1.2 percentage points lower than January), China is 4.3% (0.9 percentage points lower than January),EUR2.5% (down 1.7 percentage points from January). War-torn Ukraine is forecast to decline by 45.1%, while Russia is also likely to contract by 8.9%.
World Bank President David Malpass believes that global economic growth, affected by the Russian-Ukrainian war, China’s new crown epidemic control measures, and supply chain disruptions, may enter “a prolonged period of weak growth and rising inflation”, which may stagnate Inflation risk.
Malpass wrote in the foreword to the report that the risks of stagnant inflation are now considerable, and economic growth may be subdued for a full decade due to weak investment in much of the world. In addition, with inflation now at multi-decade highs in many countries, it is likely that inflation will remain elevated for an extended period while supply is slowly growing.
The report also cited weak economic growth in the 1970s as an example, referring to the large rate hikes in the 1970s to control inflation, which led to the 1982 global recession and a series of economic crises. While there are similarities between the current situation and the situation at the time, there are also major differences.
To reduce risks, Malpass said, policymakers should work to coordinate aid to Ukraine, deal with soaring energy and food prices, increase debt relief, strengthen control of the spread of the new crown epidemic, and accelerate the transition to a low-carbon economy.
The World Bank expects global growth to hover around 2022 levels in 2023 and 2024, and expects global inflation should moderate next year, although inflation levels in many economies are likely to remain above target.
