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The World Bank lowers its forecast for global economic growth in 2022

High inflation, geopolitical tensions and rising interest rates are lowering the outlook for economic development. (Artwork – Photo: The New York Times)

At the same time, the World Bank warned that many countries could fall into a serious recession.

In the Global Economic Outlook report released on June 7, the World Bank said that the world economy could experience its steepest deceleration, following the initial recovery from a global recession over the past 80 years. The drop comes as global economic growth recovers to 5.7% in 2021 after the recession caused by the COVID-19 pandemic.

According to the World Bank, the conflict between Russia and Ukraine has sent prices of commodities, including oil and grains, soaring. The report also emphasizes that the conflict and the effects of the COVID-19 pandemic may cause the global economy to enter a period of prolonged weak growth and rising inflation. This could increase the risk of stalling inflation, with consequences for low- and middle-income economies.

In a statement, World Bank President David Malpass affirmed that the conflict in Ukraine, China’s blockade to prevent and control the COVID-19 epidemic, along with supply chain disruptions and the risk of stagflation are “contained” growth”. For many countries, recession is inevitable.

The World Bank lowers its forecast for global economic growth in 2022 - Photo 1.

British people shopping at a supermarket. (Image: Getty Images)

The report also points out some similarities between the current economic situation and the 1970s, when growth stalled and inflation skyrocketed, and supply factors pushed fuel prices up. and low interest rates maintained for a long time. However, the report also makes important distinctions between the current situation and the 1970s, in which the dollar is very strong and major financial institutions are in a strong position.

In addition, the WB also warned of the risk of controlling rising inflation by controlling prices or restricting exports. The head of the World Bank affirmed the urgency of encouraging production and avoiding trade restrictions. According to him, in order to reduce risks, policymakers need to coordinate to deal with rising oil and food prices, strengthen debt forgiveness as well as efforts to prevent the COVID-19 pandemic.

The Global Economic Prospects report also forecasts that economic growth in advanced economies could decline sharply to 2.6% in 2022 and 2.2% in 2023, after reaching 5 .1% in 2021. Meanwhile, growth in developing and emerging economies will only reach 3.4% in 2022, much lower than 6.6% in 2021, also as below the annual average of 4.8% for the period 2011-2019. The World Bank also lowered its growth forecast for the US by 1.2 percentage points to 2.5%, while lowering its forecast for economic growth by 0.8 percentage points for the world’s second largest economy. an unusually low level of 4.3%. The World Bank also lowered its economic growth forecast for the Eurozone to 2.5% and Japan to 1.7%. The World Bank forecasts that the growth of the Russian economy in 2022 may decrease by 11.3%.

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