Washington (AP) – The World Bank has severely lowered its outlook for the global economy, pointing to Russia’s war against Ukraine, hopes of widespread food shortages and concerns about a possible return to “stagflation” – a mixture high inflation and slow toxicity. Growth has not been seen for more than four decades.
The Poverty Alleviation Agency of 189 countries predicted on Tuesday that the world economy will grow 2.9% this year. This will come from 5.7% worldwide growth in 2021 and the 4.1% forecast for January 2022.
“It will be difficult for many countries to avoid a recession,” said David Malpas, president of the World Bank.
The agency is not releasing a clearer picture for 2023 and 2024: it predicts global growth of only 3% in the same year.
For the United States alone, the World Bank reduced its growth forecast to 2.5% this year from 5.7% in 2021 and to 3.7% in January. For the 19 European countries that share the euro currency, it has reduced its growth prospects to 2.5% this year from 5.4% last year and from 4.2% expected in January.
In China, the world’s second largest economy after the United States, the World Bank expects growth to slow to 4.3% from 8.1% last year. China’s zero-sum COVID policy, which includes a dragon blockade in Shanghai and other cities, has halted economic life. The Chinese government is helping to alleviate economic pain.
Emerging markets and emerging economies together forecast 3.4% growth this year, down from 6.6% in 2021.
Russia’s invasion of Ukraine has severely hampered global trade in energy and grain, destroying the global economy, which has strongly recovered from a corovirus pandemic. As a result, high commodity prices have risen, threatening food security in poor countries.
“There is a serious risk of malnutrition and increased hunger and even starvation,” Malpas warned.
The World Bank expects the price of oil to rise by 42% this year, while the price of the non-energy commodity will rise by nearly 18%. But he predicts an 8% drop in the price of oil and other commodities in 2023. He compared the current rise in energy and food prices to the oil shock in the 1970s.
“Additional negative shocks,” the agency warns in a report on its new global economic outlook, “increase the likelihood that the global economy will experience a period of stagflation reminiscent of the 1970s.”
The prospect of stagflation poses a problem for the Federal Reserve and other central banks: if they continue to raise interest rates to fight inflation, they risk causing a recession. But if they try to stimulate their economies, they risk raising prices and making inflation a more insurmountable problem.
The World Bank has noticed that the required level of stagflation in the past has risen so sharply that it has plunged the world into recession and caused a series of financial crises in the poorest countries in the developing world.
Source: Huffpost
I’m Liza Grey, an experienced news writer and author at the Buna Times. I specialize in writing about economic issues, with a focus on uncovering stories that have a positive impact on society. With over seven years of experience in the news industry, I am highly knowledgeable about current events and the ways in which they affect our daily lives.