According to Reuters sources, the World Bank on Tuesday, July 5, 2022, lowered its forecast for global growth to 2.9 percent for 2022, warning that the Russian invasion of Ukraine has compounded the damage caused by the Covid-19 pandemic, while it may push many countries into recession.
The World Bank said in its Global Economic Prospects report that Russia’s invasion of Ukraine further slowed the global economy, which is now entering what could become a “long period of weak growth and high inflation”.
World Bank President David Malpass stated that global growth has been affected by war, new shutdowns due to the Covid-19 virus in China, supply chain turmoil and the threat of stagflation, a period of weak growth and high inflation that the world last witnessed in the 1970s, and the weak growth is likely to continue throughout the decade due to low investment in most parts of the world.
“With inflation now at multi-decade highs in many countries and expectations that supply will grow slowly, there is a risk that inflation will remain high for much longer,” he added.
He stated that the pace of global growth is expected to slow between 2021 and 2024 by 2.7 percentage points, more than double the slowdown seen between 1976 and 1979.
The report warned that interest rate increases aimed at controlling inflation at the end of the 1970s were so severe that they led to a global recession in 1982 and a series of financial crises in emerging markets and developing economies.
The bank expects a decline in global growth to 2.9 percent in 2022 from 5.7 percent in 2021, while the growth rate will hover near this level in 2023 and 2024. It said that global inflation should decline next year, but it is likely to remain above the target in many economies. .
Growth in advanced economies is expected to slow sharply to 2.6 percent in 2022 and 2.2 percent in 2023 from 5.1 percent in 2021.
Emerging market and developing economies witness growth of just 3.4 percent in 2022, down from 6.6 percent in 2021 and well below the annual average of 4.8 percent recorded from 2011 to 2019