The World Bank warned of a global recession. David Malpass, President of the World Bank, stated that recession is likely in many countries. This is the most severe slowdown in over 80 years .”
World Bank: Global Recession and Stagflation
The World Bank issued a warning Tuesday about the increasing risk of global recession and stagflation. David Malpass, President of the World Bank, stated:
Growth is being hampered by the war in Ukraine, China lockdowns, supply-chain disruptions and the risk for stagflation. Many countries will have to deal with the consequences of recession.
“Markets look forward so it is imperative to encourage production, and avoid trade restrictions. He explained that capital misallocation and inequality can be countered by changes in fiscal, monetary and climate policy.
Bloomberg Tuesday was updated by the World Bank President, who clarified that we are not yet in a global recession. He said that there was a downside to the possibility of a global recession.
Malpass said, “One of the key variables in whether supply returns online to add growth or slow down the inflation rate.”
He emphasized:
This is the most severe slowdown in 80-years.
He explained that this is the difference between the 2021 rate, which was high due to the recovery from Covid, and the 2.9% we are currently looking at in 2022. It’s a sharp slowdown, and it’s really affecting the poorer countries.
The Bank released a Tuesday report stating that “global growth is expected to plummet from 5.7% in 2021 down to 2.9% 2022 — significantly less than the 4.1% forecast in January.”
The Bank warned of stagflation and stated that there is a high risk of stagflation. The World Bank also noted that inflation and slow growth could persist for many years.
Malpass emphasized the following:
It is global, but it mainly affects the developing countries.
He noted that there is a lot of inequality in the world, so the advanced economies and especially the top people in advanced economies have done well over the past decade.
Malpass explained: “The reason this is a long-term risk for the whole world is because we are coming off a very unusually low period of interest rates.” It was uncharted territory last year in both fiscal and monetary policies.
