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World Bank downgrades 2022 global economic growth forecast to 2.9pc, warning of stagflation risk

World economy The World Bank Group warned of the risk of stagflation in its latest global economic outlook released Tuesday, saying it is expected to grow 2.9% in 2022, down 1.2 percentage points from January’s forecast. According to the report, further exacerbating the damage caused by the COVID-19 pandemic, the war between Russia and Ukraine has exacerbated the slowdown in the global economy, which could be a protracted period of weak growth and rising inflation.

According to the report, this increases the risk of stagflation and can have adverse consequences for low- and middle-income countries as well.

According to the report, global growth is expected to fall from 5.7% in 2021 to 2.9% in 2022 and stay at that pace from 2023 to 2024.

Growth in developed countries is projected to slow sharply from 5.1% in 2021 to 2.6% in 2022.

Growth between emerging markets and developing countries is also projected to decline from 6.6% in 2021 to 3.4% in 2022, well below the average annual 4.8% from 2011 to 2019.

As a result of pandemic and war damage, per capita income levels in developing countries this year will be nearly five percent below pre-pandemic trends.

World Bank President David Malpass He said recessions would be difficult to avoid for many countries, adding that there was an urgent need to encourage production and avoid trade restrictions.

“To combat capital misallocation and inequality, fiscal, financial, climate and debt policy changes are needed,” Malpas said.

Global inflation has risen sharply from its mid-2020 lows, with global demand recovery, supply bottlenecks, and rising food and energy prices, according to the report. The market expects inflation to peak in mid-2022 and then decline, but remains rising.

The report also provides the first systematic assessment of how current global economic conditions compare to stagflation in the 1970s, and how stagflation affects emerging markets and developing economies. I especially emphasize what to do.

It was noted that ending stagflation in the 1970s required a “rapid rise” in interest rates, which caused a global recession and a series of financial crises in emerging and developing countries.

If inflation remains high, repeated resolutions of previous stagflation episodes could lead to a sharp global recession, along with financial crises in some emerging markets and developing economies. The report warned.

“Developing economies will need to balance the need to ensure fiscal sustainability with the need to mitigate the impact of today’s overlapping crises on the poorest citizens,” he said. .. Ayhan KoseDirector of the World Bank Prospect Group.

“To effectively lock inflation expectations and have the desired effect on inflation and activity by clearly communicating monetary policy decisions, leveraging a credible monetary policy framework, and protecting central bank independence. We can reduce the amount of policy tightening required, “Kose said.

Source: ANI / Xinhua

https://www.helsinkitimes.fi/world-int/21708-world-bank-downgrades-2022-global-growth-forecast-to-2-9-pc-warns-of-stagflation-risk.html World Bank downgrades 2022 global economic growth forecast to 2.9pc, warning of stagflation risk

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