The World Bank warned of a possible global recession. World Bank President David Malpass said, “For many countries, a recession will be inevitable.” This is the sharpest recession in 80 years.”
The World Bank’s position on the global recession, stagflation
The World Bank warned Tuesday of the growing danger of stagflation and a global recession. World Bank President David Malpass said.
The risk of war in Ukraine, lockdowns in China, supply chain disruptions, and stagflation are taking a toll on growth. For many countries, a recession will be hard to avoid.
“With markets looking forward, it is imperative to encourage production and avoid trade restrictions. Fiscal, monetary, climate, and debt policy changes are needed to address capital misallocation and inequality,” he explained.
The World Bank president clarified on Bloomberg on Tuesday that we are not yet in a global recession. However, he expressed the view that “the downside risk is that we could be in a global recession.”
Malpass continued, “One of the key variables is whether supply comes back online to add growth and slow inflation.”
He emphasized.
This is the sharpest slowdown in 80 years.
“It is from the rate in 2021, which was high for the recovery from Covid, to what we are seeing now, 2.9% in 2022.” He elaborated.” This is a very sharp slowdown, and it is hitting the poorer countries hard.”
In a report issued Tuesday, the World Bank said.” Global growth is expected to slump to 2.9% in 2022 from 5.7% in 2021, well below the 4.1% forecast in January.”
The Bank also warned that “the risk of stagflation is substantial. In addition, inflation and low growth could persist for several years, the Bank said.
Regarding the Bank’s stagflation warning, Malpass stressed that.
global, but especially hitting developing countries.
“There is so much inequality in the world that the developed countries, especially those at the top of the developed world, have done very well over the last decade.” He noted.
Malpass elaborated. “The reason this is a lingering risk for the world is that we are coming off a period of very exceptionally low interest rates. Last year, I was asked to comment on fiscal policy … I called it uncharted territory for both monetary policy.”
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