The study, entitled Global Economic Prospects - June 2022, was published on Tuesday.
David Malpass, the World Bank’s president, wrote in the report: “Amid the war in Ukraine, surging inflation, and rising interest rates, global economic growth is expected to slump in 2022.”
The danger of stagflation
He warned: “Several years of above-average inflation and below-average growth are now likely, with potentially destabilising consequences for low- and middle-income economies.”
“It’s a phenomenon—stagflation—that the world has not seen since the 1970s,” the World Bank president noted.
Recession ‘hard to avoid’ for many countries
Malpass wrote that “COVID-19 already dealt a major setback to income growth and poverty reduction in developing economies.”
He added: “The fallout from the war in Ukraine compounds the challenges for many of them. They are expected to grow 3.4 percent in 2022—barely half the rate in 2021 and well below the average from 2011 through 2019.”
Meanwhile, “Middle-income countries will see a sharp downgrade to growth in 2022, losing 1.3 percentage points relative to the January forecast,” the World Bank president stated.
He warned: “Because of the adverse shocks of the past two years, real income per capita in 2023 will remain below pre-COVID-19 levels in about 40 percent of developing economies. For many countries, recession will be hard to avoid.”
Global growth to slow by 2.7 ppts between 2021-2024
Malpass noted: “Even if a global recession is averted, the pain of stagflation could persist for several years— unless major supply increases are set in motion.”
He predicted in the report that between 2021 and 2024, global growth would slow by 2.7 percentage points.
World Bank approves USD 1.49 bn in new funding for Ukraine
Also on Tuesday, the World Bank endorsed USD 1.49 billion in additional assistance for war-hit Ukraine, “to pay for wages for government and social workers.”
It’s part of a wider support package for Ukraine, worth over USD 4 billion, which covers healthcare, education and sanitation, among other policy areas, the BBC reported.
Wednesday is day 105 of the Russian invasion of Ukraine.
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Source: worldbank.org, bbc.com