The World Bank's latest Global Economic Prospects report drew attention to the global recession, which could turn into a prolonged period of weak growth and high inflation, with the Russian invasion of Ukraine and the damage done by the COVID-19 pandemic.
World Bank President David Malpass said: "The war with Ukraine, the restrictions imposed in China due to the coronavirus, the disruptions in the supply-demand chain, high inflation and low growth rates are hitting the economies. We will likely continue to see low growth rates over the next 10 years due to weak investment in much of the world. With inflation at record highs in many countries and slow supply growth expected, inflation risks remaining high for a long time." He stated that the underdeveloped countries in the east of Europe and Asia are facing a great recession and the risk of stagflation has increased.
At the same time, energy and food prices are increasing significantly around the world. The World Bank expects oil prices to rise 42% this year. Additional adverse shocks, the agency warned in its new Global Economic Prospects report, will increase the possibility that the global economy will experience a period of stagflation reminiscent of the 1970s.
The World Bank also lowered its growth expectations and predicted 2.9% growth this year. In January, growth of 4.1% was projected for 2022. David Malpass warned that "even if the risk of a global recession is eliminated, high inflation and low growth rates may continue for several more years unless large supply increases are achieved."
