The World Bank has again become gloomier about global economic growth this year. The Russian invasion of Ukraine and the sharp rise in prices are slowing growth, partly because companies have less money left for investments.
The World Bank, the world’s largest development cooperation institution, is now forecasting 2.9 percent growth in the global economy. In April, economists at the institute still kept it at 3.2 percent growth, which was already a sharp decrease from the estimate of 4.1 percent in January.
According to World Bank President David Malpass, the risk of a prolonged situation of high inflation and low economic growth, also known as stagflation, is very high. “Constrained growth is likely to continue throughout the decade due to low investment in many parts of the world,” he writes in the foreword to a new growth estimates report. There is “a risk that inflation will remain high for longer,” he adds.
In addition to the war in Ukraine, the corona lockdowns in major Chinese cities are also creating bottlenecks in the supply of products, which threatens to make goods more expensive. The 1970s were also marked by stagflation. The World Bank estimates that the slowdown in growth will be stronger between 2021 and 2024 than between 1976 and 1979.
Politicians and other policymakers must do everything they can to contain the rise in oil and food prices, according to the World Bank. The financial institute also points out the importance of measures against a new corona outbreak and the transition to a less polluting economy.
The global economy grew by 5.7 percent in 2021. A year earlier, the corona pandemic caused the biggest economic dip since World War II.
Average Rating