WB Cuts Global Growth Forecast To 2.9%, Warns Of Stagflation Threats

The World Bank (WB) lowered its global growth prediction for 2022 by over a third, to 2.9 percent, saying that Russia's invasion of Ukraine has aggravated the damage caused by the COVID-19 epidemic, and many countries are now in recession, Andrea Shalal reported for Reuters.

Photo Insert: The World Bank headquarters in Washington D.C., United States

The crisis in Ukraine had exacerbated the global recession, which was now entering "a protracted period of feeble growth and elevated inflation," according to the World Bank's Global Economic Prospects report, which also warned that the situation may worsen.

If downside risks materialize, World Bank President David Malpass stated in a press conference that global GDP might decline to 2.1 percent in 2022 and 1.5 percent in 2023, bringing per capita growth close to zero.

The conflict, new COVID lockdowns in China, supply-chain disruptions, and the increased risk of stagflation — a period of sluggish growth and high inflation last seen in the 1970s — are all weighing on global GDP, according to Malpass.

"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. 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."

Between 2021 and 2024, the pace of global growth is projected to slow by 2.7 percentage points, Malpass said, more than twice the deceleration seen between 1976 and 1979.

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